May 18, 1998

Doomsayers of the Keynesian persuasion have been warning us about an impending surge in inflation. Their argument is based on the Phillips curve -- which states strong economic growth leads to higher prices. Yet, after a sustained period of relatively strong economic activity, there is no inflation in sight. We attribute this to Federal Reserve Chairman Alan Greenspans remarkable management of the nations monetary affairs. He has implemented a price-stability discipline that has kept inflationary pressures low and falling. This discipline, a domestic price rule, has served the country well.

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