Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 9/18/84; site arizona.UUCP Path: utzoo!watmath!clyde!burl!ulysses!mhuxr!ihnp4!arizona!wendt 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).