ABSTRACT
Understanding the Conservative program for stabilization and growth requires recognition of the fact that consumption is at the center of economic life. Accommodating consumption necessitates production and the means for production. On the macroeconomic level, it is the production or supply side of the economy that is the source of income that permits consumption. It does not happen the other way around. The Conservative prescription is composed of two basic elements:
• Redirect fiscal and monetary policy from attention to the demand or consumption side of economic activity to the supply or production side. Ultimately, fiscal and monetary policy must be neutral. The govemment should perform only its most necessary functions and under the regimen of a balanced budget. Monetary authorities would set a rate of growth in the money supply that approximates the potential growth in the economy and spurn trying to manipulate interest rates in the interest of stabilization. Markets will be the workhorse and coordinator of economic activity, not the government or the central bank.
