The Rise and Fall of Monetarism

Obsessing over control of the money supply was a central idea, but has been proven mostly wrong. Despite looking good until the 1980s, the importance of monetary aggregates broke down, leading to divergence and confusion. The 2008-2009 episode saw the money supply increase without significant price inflation, causing many to discard the obsession over the money supply. However, in recent years, monetarist predictions have been accurate, suggesting the theory may hold true in some circumstances but not in others, making it less general than previously thought.

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