Jim, When a thread gets too involved, we need to go back to the start. This was the start -- Krugman's mocking remark:
"Translation: there are crazy people [e.g. Krugman] who think that the money supply should grow over time, in line with the long-run growth of real GDP. By that standard, Milton Friedman was crazy." (http://krugman.blogs.nytimes.com/2010/07/13/a-quotation-ruined-by-context/) You wrote that Mill's remarks were *not* leveled against Friedman. They may apply to Krugman, but not to Friedman -- if I get your drift. Seemingly, Mill's remarks were directed at Peel, when he was forced to make pragmatic policy decisions to deal with financial messes. Peel's own legislation restricting the Bank of England's monetary activism (supposedly to avoid once and for all the financial panics that afflicted England back then) had to be suspended repeatedly to limit the damage caused by subsequent financial panics! Now, my point is that Krugman is correct -- that Mill's remarks do apply to Friedman, since Friedman held the view that monetary policy had real effects. In other words, Mill's remarks apply to Friedman insofar as he advocates keeping a certain growth rate of the money supply as a condition for actual output growth approaching its potential (or, if you prefer, the level of output consistent with Friedman's NRU). Such a policy (like Peel's), in Mill's terms, leads to the "degradation" of the monetary standard. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
