Recently, economic nobelist Milton Friedman said money-supply growth should err on the side of ease today. He is totally right, but key liquidity measures that stalled last winter must be significantly strengthened. The Fed must recognize that the creation of new money will halt the spread of deflation, support growing dollar needs in Latin America and other parts of the globe, and relieve the lingering corporate credit crunch.
As economists and investors ponder uncertainties over the impending war on Iraq, the importance of adequate money-adding should not be debated. Adequate money adding should simply be performed — for the sake of a stock-market rebound and the security that comes with a strong economy.
The Federal Reserve will announce a monetary policy decision Tuesday afternoon amidst great turmoil in the world economy. Let's hope they make the right move and open the money spigots.
~ Larry Kudlow, "It’s Up to Greenspan," September 24, 2002