6. Advantage
Don’t need to
know Money
Supply
Advantage
Don’t need to worry
about short-run
changes to inflation
Advantage
Monetary policy
becomes more
predictable
Advantage
Don’t need to worry
about real economy
7.
8.
9.
10. • F.A. Hayek
•“Any change in the velocity of circulation would
have to be compensated by reciprocal change
in the amount of money in circulation if money
is to remain neutral…” (1935).
• Milton Friedman
•“[T]he Fed must see to it that the quantity of
money changes in such a way as to offset
movements in velocity...” (2003).