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From: wendt@arizona.UUCP (Alan Lee Wendt)
Newsgroups: net.politics.theory
Subject: Re: The gold standard.
Message-ID: <21481@arizona.UUCP>
Date: Mon, 11-Feb-85 00:00:27 EST
Article-I.D.: arizona.21481
Posted: Mon Feb 11 00:00:27 1985
Date-Received: Tue, 12-Feb-85 04:48:48 EST
References: <613@ukma.UUCP> <5029@utzoo.UUCP>
Organization: Dept of CS, U of Arizona, Tucson
Lines: 14

> ... is there any good
> reason to tie the growth in wealth with a growth in the money supply
> as a matter of course? Milton Friedman seems to think so...
> 
Indeed, why not just target a basket of commodities and try to
hold their price steady? Seems like this would be easier than
measuring the money supply and praying that the growth rate
about matches it.  I think the reason is that commodity prices
lag monetary growth by four or six months(?), and money supply
growth tends to lag the decision-making process, so we're in
danger of setting up positive-feedback loops.  That's why Friedman
argued for concurrent reserve accounting instead of lagged reserve
accounting, to try and close the loop faster (a change that has
been implemented, I think).