Monetarism and Keynesianism: Identical Sides of the Same Adolescent Coin

Keynes Friedman

(It’s not a gold coin.)

Monetarism and Keynesianism are often held up as opposite economic theories. One, Monetarism is supposedly “free market,” the other Keynesianism, is the religion of central planners. The sad truth is that they are not in fact opposites at all. Both schools rely on the heavy hand of central planners and not the invisible hand of markets. (Like the Austrian School does.)

(From Forbes)

Whereas Keynesians naively believe that government spending is a source of economic growth, monetarists in a similarly naïve way believe that money creation for the sake of it boosts the economy. Much as Keynesian demand through government spending allegedly increases growth and the price level, so does monetarist money creation per the other School’s theory. One School thinks government boosts growth, the other thinks money creation does, and both come to the same conclusion that inflation can be the end result of their central planning that allegedly leads to prosperity first. Comically, both sides believe that if they can manage the spending and money creation, that their expertise ensures a lack of what they presume inflation to be.

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