Too Much Money…?
7 May 1976
SUGGESTED
Government and Institutions
Essays in politcal economy by economists and parliamentarians
26 February 1976
Monetary Policy
No government has maintained the value of its currency without external discipline
10 July 1976
Lifestyle Economics
15 November 2024
The relationship between the money supply and inflation
It is essential to understand the reasons for and the pressures behind excessive monetary growth if the money supply is to be controlled and economic recovery permitted at the same time.
The most important reason why governments allow excessive monetary growth is their attempts to stop unemployment rising. In the absence of monetary growth, a rise in money wages faster than output would lead to unemployment.
Monetary growth occurs when both the government and companies borrow from the banks, which are the residual source of finance for both. Such borrowing tends to occur when the demand for finance exceeds the supply of savings in the economy as a whole.
Hobart Paper 68
The most important reason why governments allow excessive monetary growth is their attempts to stop unemployment rising. In the absence of monetary growth, a rise in money wages faster than output would lead to unemployment.
Monetary growth occurs when both the government and companies borrow from the banks, which are the residual source of finance for both. Such borrowing tends to occur when the demand for finance exceeds the supply of savings in the economy as a whole.
Hobart Paper 68
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