Tyler Cowen is an exceedingly good Economist, and his Post “Why I disagree with Milton Friedman” (http://www.marginalrevolution.com/) stands as self-explanatory. His use of the Swiss example of the 1980s proves his knowledge of the Subject. I myself am opposed to the fixed monetary rule as proposed by Milton Friedman. The trouble for me results in my distaste for the floating monetary rule as well.
My belief holds that volatile Short-term Interest rates are necessary for the proper functioning of the Market. The lack of this volatility secures the practice of Stock Options, removes Business suppression of Wages in negotiation, impels excessive construction of Consumer Credit, and leads to low-Profit Capital construction. I like Short-term Interest rate volatility.
My Solution is to peg the current Money Supply, and let the ‘Creative Destruction’ of that Peg flow through the Market. It would intrinsically increase the value of present Capital Construction, lead to extended Productivity of such Capital, allow Market reduction of extreme levels of Consumer Credit, and reintroduce a Savings rate into the American economy. I would even go so far as to accredit it with a potential to reduce the level of Imports, and increase the level of Exports. I doubt it would have any impact upon the current level of Employment. lgl
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