Keynesian solution of ,Government playing God to rescue people from crisis was loved by politicians. Free market proponents were not encouraged. Starting 1950s, the fightback to Keynesian school was spearheaded by Milton Friedman . He argued by tuning the money supply in the economy you can have stable system, rather than Government intervention which is known as Monetarism. Inflation is a monetary(money) phenomenon everywhere ,he declared. He cited an example, of American civil war, where inflation in the south was 4% a month . One fine day, the Northern army ran over the money printing press of the south . It took 2 weeks to relocate the money printing press and start printing again. In 2 weeks , inflation came to a halt in the south. Sustained inflation has only one cause, money supply outpaced the production of goods and services. He argued for increasing money supply at constant rate for stable economy. Milton Friedman was an anti-Government crusader. 'Th...
Comments
Post a Comment