The irony was that, despite the M1 growing by more than 5 percent in 1970 and 10 percent during the first half of 1971, the engine still sputtered. At the June 1971 FOMC meeting, the Fed’s chief economist admitted to confusion. “Why do recent high capital growth rates…fail to produce satisfactory real performance?” asked Charles Partee.
At the same time, Milton Friedman was writing to Arthur Burns and telling him that he was “surprised” by the high rates of money growth.
That’s from Allen J. Matusow’s fascinating 1998 book, The Nixon Economy: Booms, Busts, Dollars, and Votes.
I didn’t know that in 1971, for a time, President Nixon wanted a ten percent tax on imports from the United States. That was then, this is now…
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