A Benjamin Cole post
“The Federal Reserve has reduced the federal funds rate repeatedly from nearly 10% in 1989 to about 3% recently. According to conventional wisdom on Wall Street, that is evidence that monetary policy has been extremely easy, that the Fed has done all it can to stimulate the economy, and that it is pushing on a string, as another ancient cliché has it. This wisdom may be conventional, but it is incorrect.”—Milton Friedman, The Wall Street Journal, October 23, 1992.
It was October 1992, inflation as measured by the CPI was running at about 3.2 percent, and real GDP was expanding at about 4.0%.
Yet the title of Friedman’s op-ed concerning the Fed? “Too Tight For A Strong Recovery”
The monetary master added, “It is hard to escape the conclusion that the restrictive monetary policy of the Federal Reserve deserves much of the…
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