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Mar 29, 2024
6:58:11pm
Japan Coug Truly Addicted User
You have completely misunderstood Friedman. He never says that government
*spending* is the source of inflation.

Let's take the famous quote you posted above:

"[Inflation] is always and everywhere, a monetary phenomenon. It's always and everywhere, a result of too much money, of a more rapid increase in the quantity of money than an output. Moreover, in the modern era, the important next step is to recognize that today, governments control the quantity of money."

There is nothing in that quote about government spending (fiscal policy). In the US and most modern developed economies, the quantity of money, or the "money supply" as it is called (e.g. when there is "too much money", or a "rapid increase in the quantity of money") is controlled by the central bank — the Federal Reserve, in the US. What he is saying is that inflation is driven by the growth of the money supply, meaning the Fed (in the US) and monetary policy. I.e. Not fiscal policy (government spending).

This is Econ 101. Or at least Macroeconomics 301.
This message has been modified
Originally posted on Mar 29, 2024 at 6:58:11pm
Message modified by Japan Coug on Mar 29, 2024 at 6:58:57pm
Message modified by Japan Coug on Mar 29, 2024 at 6:59:32pm
Message modified by Japan Coug on Mar 29, 2024 at 7:02:51pm
Japan Coug
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Japan Coug
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