The Rise and Decline of Monetarism

Abstract

The great revival of ‘monetarism’ in the 1970s, culminating in the adoption of the strict prescriptions of the monetarist creed by a number of Western governments at the turn of the decade— particularly by President Reagan’s administration in the U.S. and Mrs. Thatcher’s in Great Britain - will, I am sure, go down in history as one of the must curious episodes, comparable only to the periodic outbreaks of mass hysteria (such as the witch hunts) of the Middle Ages. Indeed I know of no other instance in economics where an utterly false doctrine concerning the causation of economic events had such a sweeping success in a matter of a few years.