Why did Milton Friedman focus on money supply?
Understanding the role of money is crucial for economic stability. In 'A Monetary History of the United States,' Anna Schwartz and I demonstrated how changes in the money supply, particularly sharp contractions, were a significant factor in causing and prolonging economic depressions. My essay 'The Role of Monetary Policy' further argued that monetary authorities should focus on steady growth of the money supply rather than attempting to fine-tune interest rates or other economic variables, which often leads to unintended consequences.
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