Money, Monetary Policy, and Monetarism

Early in 1979 inflation rate in the United States reached 10% and there were no signs of let up on the horizon; indeed, it would reach 14% in 1980 before subsiding (Fig. 9.1). If one relied on estimates of the Phillips curve, another Great Depression would be needed to get rid of inflation. Past expansionary policies were bearing fruit.

We suffer from the longest and one of the worst sustained inflations in our national history. It distorts our economic decisions, penalizes thrift and crushes the struggling young and the fixed-income elderly alike. It threatens to shatter the lives of millions of our people.

The inaugural speech of President Ronald Reagan , January 20, 1981

Every empirical study rests on a theoretical framework, on a set of tentative hypotheses that the evidence is designed to test or to adumbrate. … That framework is the quantity theory of money—a theory that has taken many different forms and traces back to the very beginning of systematic thinking about economic matters. It has probably been “tested” with quantitative data more extensively than any other set of propositions in formal economics—unless it be the negatively sloping demand curve.

Milton Friedman . “A Theoretical Framework for Monetary Analysis”

But down these mean streets a man must go who is not himself mean, who is neither tarnished nor afraid.

Raymond Chandler, “The Simple Art of Murder”