Monetarist

Monetarist

An economist who believes that changes in the money supply are the most important determinants of economic activity and economic cycles. See: Monetarism

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Monetarism

In economics, a theory stating that inflation results directly and exclusively from the expansion of a country's money supply. That is, if a government prints money, inflation will result. Monetarists believe that a government ought to set target interest rates to encourage or slow growth in the supply. For example, when an economy is growing rapidly, monetarists recommend raising interest rates. On the other hand, they recommend lowering interest rates in a recession. In general, however, monetarists recommend that a government maintain a relatively steady money supply, with an allowance for growth to keep up with GDP expansion. Many of its beliefs, notably the one on interest rates, are still commonly held, though many economists believe the relationship between money supply and inflation is more complex than monetarism theorizes. Milton Friedman is considered the father of modern monetarism.

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monetarist

A proponent, usually an economist, of monetarism. Milton Friedman is probably America's best-known monetarist.