Jennifer Burns

This is inflation going over 10%, hovering an 8% for basically the whole decade of the 70s, going up and down with extremely elevated rates. And so... The Carter presidency largely falls. Foreign policy is a big part of it, but the failure to tame inflation is part of it. And then Reagan comes in. And now Reagan loves Friedman and Friedman loves Reagan. Very mutual feeling.

This is inflation going over 10%, hovering an 8% for basically the whole decade of the 70s, going up and down with extremely elevated rates. And so... The Carter presidency largely falls. Foreign policy is a big part of it, but the failure to tame inflation is part of it. And then Reagan comes in. And now Reagan loves Friedman and Friedman loves Reagan. Very mutual feeling.

The Reagan administration creates like an advisory economic board. Friedman's on it. He's retired now. You know, he's entering his kind of golden years. He really has Reagan's ear. And here what he does is he convinces Reagan of his theory of inflation, which is Inflation has been caused. It's a monetary phenomenon that has been caused by bad monetary policy. Inflation has an accelerating dynamic.

The Reagan administration creates like an advisory economic board. Friedman's on it. He's retired now. You know, he's entering his kind of golden years. He really has Reagan's ear. And here what he does is he convinces Reagan of his theory of inflation, which is Inflation has been caused. It's a monetary phenomenon that has been caused by bad monetary policy. Inflation has an accelerating dynamic.

The Reagan administration creates like an advisory economic board. Friedman's on it. He's retired now. You know, he's entering his kind of golden years. He really has Reagan's ear. And here what he does is he convinces Reagan of his theory of inflation, which is Inflation has been caused. It's a monetary phenomenon that has been caused by bad monetary policy. Inflation has an accelerating dynamic.

The only way to end inflation is by really showing and signaling that government policy has changed. And when you do that, it's very painful for a short amount of time. People will suffer. But then you will come out on the other side into stable prices. And this is what you need for economic prosperity. So the man who implements this policy, Paul Volcker, He's definitely influenced by Friedman.

The only way to end inflation is by really showing and signaling that government policy has changed. And when you do that, it's very painful for a short amount of time. People will suffer. But then you will come out on the other side into stable prices. And this is what you need for economic prosperity. So the man who implements this policy, Paul Volcker, He's definitely influenced by Friedman.

The only way to end inflation is by really showing and signaling that government policy has changed. And when you do that, it's very painful for a short amount of time. People will suffer. But then you will come out on the other side into stable prices. And this is what you need for economic prosperity. So the man who implements this policy, Paul Volcker, He's definitely influenced by Friedman.

Buys a big picture of Friedman. He even buys Friedman's specific technique of the monetary growth rule and of the focus on monetary aggregates, which Friedman has said, right? Money matters. Aggregates matter. That's what money is. Pretty quickly, Volcker finds that because of inflation and the financial deregulation in response to it, the aggregates don't work the way Friedman said they would.

Buys a big picture of Friedman. He even buys Friedman's specific technique of the monetary growth rule and of the focus on monetary aggregates, which Friedman has said, right? Money matters. Aggregates matter. That's what money is. Pretty quickly, Volcker finds that because of inflation and the financial deregulation in response to it, the aggregates don't work the way Friedman said they would.

Buys a big picture of Friedman. He even buys Friedman's specific technique of the monetary growth rule and of the focus on monetary aggregates, which Friedman has said, right? Money matters. Aggregates matter. That's what money is. Pretty quickly, Volcker finds that because of inflation and the financial deregulation in response to it, the aggregates don't work the way Friedman said they would.

And so the specific policy Friedman recommends, Volcker tries it for a year or so, doesn't work super well. But what does work is letting interest rates go high, go above inflation to a point where both the general citizenry and the financial markets believe like, oh, they're actually serious about inflation.

And so the specific policy Friedman recommends, Volcker tries it for a year or so, doesn't work super well. But what does work is letting interest rates go high, go above inflation to a point where both the general citizenry and the financial markets believe like, oh, they're actually serious about inflation.

And so the specific policy Friedman recommends, Volcker tries it for a year or so, doesn't work super well. But what does work is letting interest rates go high, go above inflation to a point where both the general citizenry and the financial markets believe like, oh, they're actually serious about inflation.

And because we've had a decade of inflation with all these presidents saying, you know, not forward, we're going to whip inflation now. that monetary policy has lost credibility. This is why people focus so much on credibility today, because once it's lost, it's really hard to get it back.

And because we've had a decade of inflation with all these presidents saying, you know, not forward, we're going to whip inflation now. that monetary policy has lost credibility. This is why people focus so much on credibility today, because once it's lost, it's really hard to get it back.

And because we've had a decade of inflation with all these presidents saying, you know, not forward, we're going to whip inflation now. that monetary policy has lost credibility. This is why people focus so much on credibility today, because once it's lost, it's really hard to get it back.

And one way Volcker gets it back is interest rates over 20%, unemployment very high, as high as 25% in like construction sectors. And as this is happening, Milton Friedman is whispering in Reagan's ear, this is the right thing. Stay the course, this is going to work. Now, interestingly, he hates Volcker. Volcker hates him.

And one way Volcker gets it back is interest rates over 20%, unemployment very high, as high as 25% in like construction sectors. And as this is happening, Milton Friedman is whispering in Reagan's ear, this is the right thing. Stay the course, this is going to work. Now, interestingly, he hates Volcker. Volcker hates him.

And one way Volcker gets it back is interest rates over 20%, unemployment very high, as high as 25% in like construction sectors. And as this is happening, Milton Friedman is whispering in Reagan's ear, this is the right thing. Stay the course, this is going to work. Now, interestingly, he hates Volcker. Volcker hates him.