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The Problem With Monetism

| February 12, 2009

The Quantity Theory of Money says that inflation is the difference between the growth rate of money, and the growth rate of the real economy.¬† Adding more money increases inflation (or decreases deflation), but has no effect on real GDP.¬† Inflation, in other words, is a function of the money supply. Monetism predicts that: Inflation¬† […]