The Rise and Fall of Monetarism

The purpose of this chapter is to present and critically evaluate the fundamental principles of the monetarist school of economic thought. Monetarism asserts that the quantity of money is the most crucial economic variable, with its fluctuations significantly influencing the behavior of the entire economic system. Coined in 1968 by Karl Brunner (1916–1989), the term “Monetarism” encompasses a school of economic thought that includes influential figures like Milton Friedman (1912–2006), Anna Schwartz (1915–2012), Karl Brunner himself, and Allan Metzler (1928–2017). However, Monetarism has roots dating back to the early nineteenth century. As explained in Chap. 10 , the University of Chicago steadfastly upholds a free-market stance, advocating for minimal government intervention. Monetarism, closely associated with the University of Chicago, seeks to explicate significant economic phenomena by emphasizing a singular variable, that is, the money supply.