Milton Friedman's Views on Inflation and Money Supply

This clip was taken from the "How to Cure Inflation" episode of the original Free To Choose TV series. Inflation results when the amount of money printed or coined increases faster than the creation of new goods and services. Money is a "token" of the wealth of a nation. If more tokens are created than new wealth, it takes more tokens to buy the same goods. Friedman explains why politicians like inflation, and why wage and price controls are not solutions to the problem. Friedman visits Japan, U.S. and Britain. To learn more or purchase the entire series, visit Check out our Facebook page here: Visit our media website to find other programs here: Connect with us on Twitter here: Learn more about our company here: Shop for related products here: Stream from FreeToChoose.TV here: ...(read more)

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Milton Friedman on Inflation and Money Supply Milton Friedman, an eminent economist of the 20th century, made significant contributions to the understanding of inflation and its relationship with money supply. His groundbreaking theories have greatly influenced policymakers and left an indelible mark on the field of economics. In this article, we will explore Friedman's views on inflation and his belief in the importance of controlling money supply. Friedman spent a substantial portion of his academic career studying the causes and consequences of inflation. He argued that inflation is fundamentally a monetary phenomenon, fueled by excessive growth in the money supply. According to him, inflation occurs when there is more money chasing the same amount of goods and services, leading to a sustained increase in prices. One of Friedman's most influential ideas was the Quantity Theory of Money, which states that there is a direct relationship between the quantity of money in circulation and the level of prices. In simple terms, if the money supply grows at a higher rate than the output of goods and services, inflation will occur. Conversely, if the money supply grows at a slower pace relative to the output, deflation or price stability will prevail. Friedman strongly believed that controlling money supply was the key to maintaining stable prices and preventing inflation. He advocated for a rule-based monetary policy framework, which suggested that central banks should focus on strict and predictable money supply growth rates. By adhering to a predetermined rule, the central bank could insulate the economy from the harmful effects of discretionary policies, thereby reducing inflationary pressures. Critics of Friedman argued that his theories oversimplified the complex nature of inflation dynamics, neglecting other important factors such as consumer expectations, real shocks to the economy, and wage-price spirals. However, Friedman acknowledged that there might be short-term factors that could temporarily influence inflation rates, but in the long run, it was the growth rate of the money supply that played a crucial role. Friedman's ideas were supported by empirical evidence from various historical periods, including the hyperinflations of Germany in the 1920s and Zimbabwe in the 2000s. In both cases, excessive money printing led to astronomical price hikes, devastating the economies of these countries. These examples, among others, strengthened Friedman's case for the importance of sound monetary policies and disciplined money supply growth. Friedman's ideas on inflation and money supply have left a lasting impact on macroeconomic policymaking. Many central banks now explicitly target inflation rates as a way to promote price stability and anchor inflation expectations. The belief in the effectiveness of controlling money supply to manage inflation became a cornerstone of monetary policy regimes worldwide. In conclusion, Milton Friedman's work on inflation and money supply remains highly influential, shaping the way economists and policymakers approach macroeconomic stabilization. His emphasis on controlling money supply growth as a means to prevent inflation has had a profound impact on monetary policy frameworks across the globe. While the complexities of inflation dynamics cannot be fully captured by a single theory, Friedman's ideas have laid the foundation for understanding the monetary causes of inflation and the importance of maintaining price stability. https://inflationprotection.org/milton-friedmans-views-on-inflation-and-money-supply/?feed_id=139406&_unique_id=651087d712f46 #Inflation #Retirement #GoldIRA #Wealth #Investing #EconomicsFieldOfStudy #EconomistProfession #economy #government #InflationQuotationSubject #JapanCountry #MacroeconomicsFieldOfStudy #MiltonFriedmanAcademic #moneysupply #politics #RecessionQuotationSubject #UnitedKingdomCountry #UnitedStatesOfAmericaCountry #InvestDuringInflation #EconomicsFieldOfStudy #EconomistProfession #economy #government #InflationQuotationSubject #JapanCountry #MacroeconomicsFieldOfStudy #MiltonFriedmanAcademic #moneysupply #politics #RecessionQuotationSubject #UnitedKingdomCountry #UnitedStatesOfAmericaCountry