(Drivebycuriosity) - Monetarism is alive and kicking. Milton Friedman claimed that a high monetary growth rate causes inflation. When the supply of money climbs faster as the supply of goods & services then prices have to rise to balance the difference. The chart above confirms Friedman´s thesis. The image shows that monetary growth jumped in 2020 & 2021 which lead to today´s high inflation (kedrosky ).
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| Real gross domestic product (GDP) growth rate in the United States |
( source)
The chart confirms also another thesis. Friedman and other monetarists claimed that an acceleration of the monetary growth pushes economic growth - bust just temporarily. Indeed the US experienced a strong economic growth in 2021. Unfortunately the push is already tapering off, confirming the monetarist claim, that a deceleration of monetary growth (happening now) will also slow down real economic growth (goods & services) and might even cause a recession.
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