Changes in the Money Supply Don’t Cause Business Cycles

Changes in the Money Supply Don't Cause Business Cycles

According to the Nobel Laureate in Economics, Milton Friedman, the root of the business cycle is the fluctuations in the growth rate of money supply.

Friedman held that what is required for the elimination of these cycles is for central bank policy makers to aim at a fixed rate of growth of money supply:

My choice at the moment would be a legislated rule instructing the monetary authority to achieve a specified rate of growth in the stock of money. For this purpose, I would define the stock of money as including currency outside commercial banks plus all deposits of commercial banks. I would specify that the Reserve System should see to it that the total stock of money so defined rises month by month, and indeed, so far as possible, day by day, at an annual rate of X per cent, where X is some number between 3 and 5. The precise definition of money adopted and the precise rate of growth chosen make far less difference than the definite choice of a particular definition and a particular rate of growth.

 

https://www.infowars.com/changes-in-the-money-supply-dont-cause-business-cycles/

 

Published by INFO JONES

"Not sweating the petty things, ...just petting the sweaty things."

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: