Monetarists would rely on increases in the money supply to straightforwardly spur consumption and investment.
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Where is the tirelessness of the market monetarists when it comes to high skilled immigration?
Monetarists ignore the most basic of economic truths that all demand is a function of supply first.
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ECB's strict monetarists probably disagree, arguing that the faster rate of money-supply growth signals higher inflation ahead.
Investors seek certainty, yet monetarists offer them chaos in terms of the most important price in the world.
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At least the monetarists propose cutting rates and expanding the money supply and the Keynesians promote deficit spending.
There are modern monetarists who have interesting things to say about the crisis.
You might think that the Austrians would find common cause with the monetarists.
This may be because economists divided into Keynesians and monetarists in the 1970s.
Monetarists and Keynesians, twins in their desire for growth in aggregate demand, promote the very ideas that drive it downward.
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Monetarists are willfully blind to the latter reality, and presume that money of indeterminate and volatile value (and rising quantity) actually boosts economic activity.
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Monetarists support QE because with the Fed buying Treasuries and mortgage securities, it is allegedly supplying the excess dollars without which the economy cannot grow.
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Precisely 40 years ago it was a story with a cast of thousands of protagonists, antagonists, nihilists and monetarists with dramatic tension up the wazoo.
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Monetarists turn the above on its head, shockingly promoting the narrative that the creation of devalued paper is what must come first for producers to produce.
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Milton Friedman and other monetarists criticised the Fed during the Martin era for what were said to be whimsical adjustments of interest rates and the money supply.
Instead, they seek hedges against the very devaluation sought by monetarists which is most often investment in the wealth of yesterday: think land, commodities, rare stamps, art, etc.
FORBES: Monetarism and Keynesianism: Identical Sides of the Same Adolescent Coin
Monetarists downplay the output gap and focus instead on the vast amount of money that has been created as central banks buy bonds or extend loans to banks.
Monetarists and other non-Keynesians believed that further expansion of money and related credit aggregates would stimulate the economy further even if interest rates were stuck in a liquidity trap.
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Margaret Thatcher was the first to understand that the monetarists were right, following their rules when she came to power in 1979, taming inflation and reinvigorating the British economy.
Monetarists correctly argued that inflation is always a monetary phenomenon, but the newly revived theory that was long ago dismissed even by Friedman is merely a variation of the much discredited Phillips Curve.
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It bears repeating since market monetarists are implicitly seeking dollar devaluation in their calls for indiscriminate money creation, that when investors commit capital to future ideas, they are explicitly purchasing future dollar income streams.
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Modern Austrians look askance at monetarists for seeking any increase in quantity, but it says here both schools are flawed for presuming to know at all what the proper supply of dollars should be.
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In fingering GDP as a target, monetarists pick a rate at which this Keynesian measure should grow at, and then they call for money growth by the Fed in order to reach the growth rate.
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Back to saving not detracting from demand, Keynesians advocate spending of the funds of others by politicians so that the economy can pick up, while monetarists are more subtle, and in being more subtle, are more dishonest.
FORBES: Monetarism and Keynesianism: Identical Sides of the Same Adolescent Coin
The irony here is that Keynesians and monetarists to a man and woman say they love jobs, but their confused ideology which says money can be had at rates set by governmental planners blinds them to the reality that if you love jobs, you must love the very savers whose capital makes employment opportunities more plentiful.
FORBES: Monetarism and Keynesianism: Identical Sides of the Same Adolescent Coin
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