Journal Article

Money and monetary policy for the twenty-first century

Abstract: This essay challenges the conventional wisdom about money and monetary policy. The role of money in fostering prosperity is a function of the quality, as well as the quantity, of money. Inflation always harms the performance of an economy. Deflations caused by productivity and innovation can be virtuous. A definition of a non-inflationary environment is set forth. Rapid real growth and low unemployment cannot cause inflation. There is no trade-off between inflation and employment. Higher commodity prices or \\"weak\\" exchange rates cannot cause inflation. High market interest rates are a symptom of inflationary policies. Low interest rates are a reflection of successful anti-inflationary policies, not \\"easy money.\\"

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Review

Publication Date: 2006

Volume: 88

Issue: Nov

Pages: 485-510