It’s official: “card-carrying” Monetarists, at least as represented by St. Louis Fed president William Poole, now renounce Milton Friedman’s constant-money-growth rule. In a speech today commemorating what would have been Friedman's 95th birthday, Poole said nothing in favor of any sort of rule (in particular, there's no word in Poole’s speech about Bennett McCallum’s velocity-and-income-responsive money-growth rule).

Poole declared:

Milton favored steady money growth because he did not believe that central bankers were wise enough to improve on the outcomes that would flow from steady money growth. With evidence from the Greenspan era, Milton changed his view a bit, but was not convinced that Greenspan’s success in adjusting the stance of monetary policy was likely to be replicated by future Fed chairmen.

Two things should be noted if we want to have an accurate take on what Friedman favored. First, at least since 1984, Friedman favored a particular type of “steady money growth” rule, namely freezing the monetary base (while letting banks freely issue inside money).

Second, while continuing to advocate a base freeze (with free banking) as first-best, in recent years Friedman changed his ranking of second-best policies a bit in response to the success of central banks around the globe at coming close to their inflation targets. He took that success as evidence that inflation or price-level targeting was a better option than he had once believed. (On both of these points see this 2006 interview. On inflation targeting see also this account of Friedman's remarks in a 2005 panel discussion.)

Poole's own view:

I believe that the Fed’s actual adjustments of its federal funds rate target have yielded superior outcomes since 1982 to what we would have observed under steady money growth. I also believe that advances in knowledge permit us to say with some confidence that these gains are not just an accident of Alan Greenspan’s special skills and intuition.

Poole concluded with this paragraph:

Although Milton did not prevail in his quest to have the Fed maintain a constant money-growth rate, he did prevail in his insistence that policy be apolitical and rely to the maximum possible extent on market judgments. He lost a battle but truly did win the war.

What does it mean for policy to be “apolitical”? Milton Friedman always insisted on something less vague, name that policy be strictly rule-governed. Poole doesn’t explicitly denounce rules in general, and he has endorsed some sort of inflation targeting in the past, but he implies that he is perfectly satisfied with the Fed's discretion. I’m sorry to see that.