The Friedmanite Corruption of Capitalism
However, if Friedmanite monetarism was anything, it was naïve about political reality. The fatal flaw of Friedman’s famous “monetary rule” of constant growth of the money supply in the 3-4 percent range was premised on the assumption that a machine-like Fed chairman would selflessly pursue the public interest by enforcing Friedman’s monetary rule. According to Friedman, Stockman writes, “inflation would be rapidly extinguished if money supply was harnessed to a fixed and unwavering rate of growth, such as 3 percent per annum.” This was the fundamental assumption behind monetarism, and it flew in the face of everything the Chicago Schoolers purported to know about political reality. In other words, Friedmanite monetarism was never a realistic possibility, for as Friedman himself frequently said of all other governmental institutions besides the Fed, a government institution that is not political is as likely as a cat that barks like a dog. Friedman’s monetary rule, Stockman concludes, was “basically academic poppycock.” He mocks the idea of a “monetary rule” as the “idea that the FOMC [Federal Reserve Open Market Committee] would function as faithful monetary eunuchs, keeping their eyes on the M1 gauge and deftly adjusting the dial in either direction upon any deviation from the 3 percent target.” This was “sheer fantasy,” says Stockman, and an extreme example of “political naivete.”Mais
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