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Milton Friedman on Inflation

Five simple truths embody most of what we know about inflation: 1. Inflation is a monetary phenomenon arising from a more rapid increase in the quantity of money than in output (though, of course, the reasons for the increase in money may be various). 2. In today’s world government determines—or can determine—the quantity of money. 3. There is only one cure for inflation: a slower rate of increase in the quantity of money. 4. It takes time—measured in years, not months—for inflation to develop; it takes time for inflation to be cured. 5. Unpleasant side effects of the cure are unavoidable.

Context. From Free to Choose (1980), written with Rose D. Friedman: the conclusions of the chapter “The Cure for Inflation”. The book sets the five points as a numbered list.

Free to Choose
Book, 1980, Ch. 9 “The Cure for Inflation”, “Conclusions”, pp. 281–282
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Milton Friedman, “Free to Choose” (1980), Ch. 9 “The Cure for Inflation”, “Conclusions”, pp. 281–282. https://miltonfriedman.org/quotes/five-simple-truths-inflation-monetary-phenomenon-1980

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He also said

  1. It follows from the propositions I have so far stated that inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.
    The Counter-Revolution in Monetary Theory
    Lecture, 1970, Institute of Economic Affairs, Occasional Paper 33 (the first Wincott Memorial Lecture), Reprinted in Monetarist Economics (Basil Blackwell for the IEA, 1991), pp. 16, 19
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  2. There is one and only one basic cure for inflation: slowing monetary growth. But that cure is easier to state than to put into effect: witness our repeated abandonment of the cure.

    Context. From a Newsweek column of October 1977, when inflation, having fallen below 5 percent in 1976, was rising again and money growth had returned to its 1972 pace.

    Why Inflation Persists
    Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
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  3. On a technical level, I believe that there is no persuasive evidence that, given the course of monetary policy and monetary aggregates, federal government deficits have any stimulative effect. They have a stimulative effect only insofar as they are financed by a more rapid increase in the quantity of money than would otherwise occur.

    Context. Asked about a statement by 100 economists calling for increased federal spending to spur growth.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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