HIST 12B Lecture Notes - Lecture 8: Monetarism, Deflation, Neoliberalism
Document Summary
First world shock waves: monetarism and the neoliberal breakthrough. Keynesianism is about how to regulate the economy, it is not a redistributive policy. Monetarism: an economic theory that focuses on macroeconomic effects of money supply. Friedman argued excessive expansion of the money supply is inflationary; advocated monetary policy that maintained price stability. Advocated a monetary policy that would maintain price stability (inflation is a bad thing unless its slow and gradual) Friedman advocated for a tight monetary policy to keep inflation under control; argued for a floating currency exchange system in which the market determines currency values. He and others broke from full employment-recognized that monetarism may result in higher unemployment. We were spending 500k to kill each enemy soldier, while we spend only for each person classified as poor. - dr. mlk. Rising naitonal debt, the balance of payments deficits, etc. , led to a speculative run on gold; foreigners sell dollars for gold.
