Slate Money Money Talks: Fixing A Broken Monetary System
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Aug 19, 2025 
Join Steve H. Hanke and Matt Sekerke, both esteemed economics professors and co-authors of a new financial reform book, as they dive into the complex world of the U.S. monetary system. They unravel how misconceptions about the money supply fueled the global financial crisis and discuss urgent reforms needed in banking and monetary policy. The duo critiques current Federal Reserve practices while advocating for a stable money supply and tackling the U.S. trade imbalance. Get ready for a thought-provoking journey into fixing economic structures!
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Banks Are The Main Money Producers
- Commercial banks create roughly 80% of the money supply by crediting deposits when they lend.
- That bank-created money drives asset prices first, then real activity, and later consumer-price inflation.
Inflation Is A Monetary Phenomenon
- Inflation is fundamentally a monetary phenomenon rather than purely a supply shock.
- Relative price shifts (like oil) only cause general inflation if the central bank expands the money supply to accommodate them.
Target A 6% Money Supply Growth
- Grow the money supply about 6% annually to hit a 2% inflation target while supporting ~2% real growth and money-demand increases.
- Targeting quantity growth avoids over- or under-shooting inflation driven by large discretionary injections.
