Zombie Monetarism¶
Three prominent economists, including a former Federal Reserve governor and adviser to US President Donald Trump, have just endorsed “soft monetarism” as a way to guide the Fed's approach to inflation. But the "quantity theory" of money failed for good reasons, and those reasons have not changed.
TOWNSHEND, VERMONT—Three prominent economists, Peter Ireland,Stephen Miran, andNouriel Roubini, have just published apaperintended to influence Kevin Warsh, the new chair of the Federal Reserve who previously studied underMilton Friedmanwhile at Stanford. Miran, a former chair of the White House Council of Economic Advisers and former Fed governor, and his colleagues seek to revive Friedman’s famous doctrine,monetarism, defined loosely as a focus on the money supply, but now dressed up in the grass skirts of a Divisia index.