----------------- HES POSTING ----------------- 
Dear Thomas, 
 
Many thanks for pointing out Friedman's response to DeLong! I had not 
caught this (I will plead extenuating circumstances, since I was out of the 
country for 6 months at that time and had to dig through my pile of 
accumulated, and unread,  journals from that time to find the relevant 
issue). 
 
Friedman's response is interesting to be sure, but so is DeLong's response, 
which I think puts the burden of proof back in Friedman's hands . And at 
any rate, even if the problem with M2 and M3 didn't start until the 1990s, 
that's a decade worth of data that was not foreseen and for which Friedman 
does not offer any neat explanation. It would seem that 10 years is a long 
time for the monetary authorities to wait to understand what they should be 
doing with their monetary aggregates! Especially if they believe there are 
significant lags in the effect of their policy actions. 
 
But my real point is to wonder out loud to anyone else on the list whether 
we have any statements from Friedman (other than his very short letter in 
response to DeLong) in which he has treid to explain the effect of the 
instability of velocity (in either the 1980s or the 1990s) on his long 
advocacy of monetary targeting? 
 
Best, 
Brad 
 
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