Jim Glass left this response to my (italicized) claim:
1. The Fed said it would start targeting the money supply, but it did not do so …. 1979-82 told us essentially nothing about the long run effect of money supply targeting. It wasn't even tried.
I don't understand you here. Certainly money supply targeting wasn't tried over a long run, so one can't see any long-run effect of it. But why do you say money supply targeting wasn't adopted at all?
Volcker in his 1992 memoir "Changing Fortunes" explained why the Fed in 1981 had to change policy to money supply targeting from interest rate targeting, and went into considerable detail about the political resistance from the Reagan Administration that he had to overcome to do it, and the political ploys he used to do so. I don't see why he'd make up such a detailed story about something that never happened.
Plus, looking at the M1 numbers for the period from Fred, one sees that after rising steadily pretty much from beginning of time, M1 peaked at $429 billion on 4/20/81, three months before the start of the recession, then went down a little bit, then bounced down a tiny tad and back up again repeatedly to hit pretty much exactly $429b again on 7/6, 8/10, and 10/12 thru 10/26 without ever going at all over $429b (or going below $423b). So on the dates three months before the recession started and then three months after it started, M1 was $429b, exactly unchanged. If the money supply wasn't being targeted during that period, all those $429b numbers are a heck of a coincidence.
It's certainly possible that the Fed was paying more attention to M1 than before. I agree with that claim. But there can be no dispute that they did not adopt Friedman's proposal of a steady 4% growth rate in the money supply. Indeed money growth actually became much less stable during 1979-82, which shows that Volcker moved policy even further away from Friedman's ideal. Now, of course, in a different sense, you could say monetarism was adopted, as he used a tight money policy to control inflation. That policy was a success.
But a money growth rule? It's never even been tried. (And I hope it never will be tried, as it's probably a lousy idea.)