With Miltie in the grave

On a day that is likely to see accusations of speaking ill of the dead, with the late and mostly unlamented Pinochet, the Wall Street Journal op-ed page strikes with indecent haste at Milton Friedman. This comes via a piece (subs. req'd) by 2004 Nobel in Economics prize winner Edward Prescott. Most of it is taken up with data-intensive justifications of economics policies that are remarkably similar to those of a certain George W. Bush (e.g. the US should be piling up even more public debt), but there's also --

Myth No. 1: Monetary policy causes booms and busts. ... Let's begin with the assumption that tight monetary policy caused the recession of 1978-1982. This myth is so firmly entrenched that I could have called this downturn the "Volcker recession" and readers would have understood my reference. To accept the myth, you have to accept a consistent relationship between monetary policy and economic activity -- and as we've just seen, this relationship is simply not evident in the data ... Our obsession with monetary policy in the conduct of the real economy is misplaced.

And thus exits monetarism from the apparently acceptable elements of conservative thought.