Monetarists v. Supply-Siders

LAST September, the Nobel Prizewinning economist Milton Friedman predicted in the Wall Street Journal that as a result of “excessive monetary growth” in the past year, there would soon be “an overheated economy,” which in turn would almost certainly mean “a subsequent acceleration of inflation, probably in middle or late 1984.”

So a crucial test of economic theory may be shaping up as one of the little-noticed events of 1984. The theory, which has had and continues to have important political repercussions, is called monetarism, and its leading proponent is Milton Friedman. Early last month, in a New York Times Op-Ed piece, he was more specific. “We shall be fortunate indeed if prices are not rising in the 7 to 10 per cent range by the fourth quarter of the year and in double digits by 1985,” he wrote.

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Tom Bethell

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LAST September, the Nobel Prizewinning economist Milton Friedman predicted in the Wall Street Journal that as a result of “excessive monetary growth” in the past year, there would soon be “an overheated economy,” which in turn would almost certainly mean “a subsequent acceleration of inflation, probably in middle or late 1984.”

So a crucial test of economic theory may be shaping up as one of the little-noticed events of 1984. The theory, which has had and continues to have important political repercussions, is called monetarism, and its leading proponent is Milton Friedman. Early last month, in a New York Times Op-Ed piece, he was more specific. “We shall be fortunate indeed if prices are not rising in the 7 to 10 per cent range by the fourth quarter of the year and in double digits by 1985,” he wrote.