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Money Growth Rule
The Money Growth Rule is based upon a theory originally set forth by Milton Friedman as a solution to keep the United States economy on a controlled course of growth. The thoery revolves around the premise that the best monetary policy that the Federal Reserve can follow is to establish a constant growth rate of the money supply independent of current economic fluctuations. The reasoning is that as the economy experiences changes in relative output, the money supply can have dramatic effects upon the economy. Additionally, by establishing a money growth rule, Friedman believed that this would eliminate the possibility of short-run mismanagement and, in the end, be more beneficial for the economy.
The problem with balancing an economy is that human judgment and evaluation of economic situations enter into the equation. Establishing a constant growth level in the money supply would eliminate the decision making process of the central banker. The problem with......
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Title: Money Growth Rule
Approximate Word Count: 792
Approximate Pages: 4 (250 words per double-spaced page)
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Money Growth Rule
Money Growth Rule. ... The idea of the money growth rule is contingent upon
the relationship between the money supply and inflation. ... ... -
Personal Input
... Compound interest is critical to investment growth. ... But just how quickly does your
money grow? ... way to work that out is by using what's known as the "Rule of 72 ... ... -
Monetarists- Old School Econ
... using monetary policy at all. Monetarists prefer a rule for steady continuous
growth of the money supply. A steady growth rate would ... ... -
Miss
... inflation targeting. Andreas Fischer (1993 Pg 5) commented on Milton Friedman's
idea of the Constant Money Growth Rule. The economist ... ... -
Hello
... Examples of usage Financial - Rule of 72 A rule of thumb ... the natural logarithm of
2, if the percent growth is much much less than 1%). In terms of money, it is ... ...
