In country after country, consensus social democratic politicians were replaced by those who would or themselves handed over power to manage the macroeconomy to central bankers whose views could be described as "monetarist"--not necessarily in the sense that they believed that chartist-like tracking of M1 was the answer, but in the sense that they believed that if the central bank focused on reducing inflation then the rest of the economy would take care of itself (see Friedman, 1968; Hall, 198?). And, indeed, the politicians and central bankers were assured by monetarist economists that a shift toward an anti-inflation policy would lead at the most to a few years of temporarily high unemployment. The monetarist belief was that business cycles are fluctuations around (not shortfalls below) a business cycle-free long run growth path. Fight inflation, the monetarists told the central bankers, and in a few years you will have the best of both worlds: low inflation and low unemployment. In the long run, Friedman (1968) assured everyone, the average rate of unemployment would be the "natural" rate of unemployment no matter what the rate of inflation was--so there was ultimately no cost to handing control of economic policy over to the inflation-fighters.
As far as the United States is concerned, it appears that the monetarists told the truth:
after a decade made more difficult by the destructive and growth-retarding structural fiscal deficits of the Reagan administration, the United States now has a low unemployment, a low inflation rate, and a high share of high-tech private investment in GDP.
As far as Europe is concerned, it appears that the monetarists lied.
Unemployment in Europe began to rise in the mid-1970s, and is now more than four times what it was at the start of that decade. There has been no sign of any "natural" rate toward which unemployment tends to return.