Invested:Central bankers: their cure is worse than the disease
The ‘Hero Central Banker’ was apparently scuppered by the oil price shock, but that was the outcome, not the cause, of the monetary policy’s failure to deliver a sustainable recovery
Some 45 years ago, in his paper The Counter-Revolution in Monetary Theory, Milton Friedman observed: “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
Ever since, the first part of this quote became the dictum of the central bankers’ view of monetary policy.
But not as much the part saying that while monetary...
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