----------------- HES POSTING ----------------- Bradley, I do not know what Friedman's response has been to the end of the stability of the velocity of money during the last 2 decades with regard to his policy suggestion, but it seems that Friedman would not agree with the stated 2 decades. In his (short) response to De Long's article (Correspondence in JEP, Vol. 14(4), Fall 2000) Friedman claims that the "break in the relevant monetary velocities does not occur in the 1980 as that chart [Figure 1 in De Long's article] would seem to suggest, but in the early 1990s." Particularly, he argues that it is true that in the 1980s the removal of the prohibition of interest payments on demand deposits lowered M1 velocity drastically, but that this had no effect on the broader aggregates M2 and M3. Thomas Moser ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]