Skip to content

Milton Friedman on Inflation

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
Not yet checkedCite this passage

Where this comes from

Not yet checkedThe wording comes from a secondary compilation and has not yet been checked against the work itself.

Topics

He also said

  1. In the present state of our knowledge, I believe that the best—or least bad—guideline for monetary policy is steady growth of the quantity of money at a rate that on the average will mean stable prices of final products.
    Statement to the House Subcommittee on Domestic Finance
    Testimony, 1968, Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, 90th Congress, 2nd Session (December 1968), p. 203
    Checked against the sourceRead the original
  2. 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.
    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
    Checked against the sourceRead the transcript
  3. For both long and short periods there is a consistent though not precise relation between the rate of growth of the quantity of money and the rate of growth of nominal income. If the quantity of money grows rapidly, so will nominal income, and conversely. The relation is much closer for long than for short periods
    Money Mischief
    Book, 1992, Ch. 2 The Mystery of Money
    Not yet checked

Think this quote is wrong, misattributed, or missing context?Report it and it gets fixed, not argued with.