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Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. ... A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.

Milton Friedman#1

EconomicsGrowthInflationMonetary policy

About this quote

What does it mean?
Friedman states inflation is caused by money supply growing faster than output, and steady moderate monetary growth aids stability.
In plain terms
Inflation happens when money grows faster than goods. Steady money growth helps stability.
What can you take from it?
Control money supply growth to manage inflation and support economic stability.

Where it applies

  • economic planning
  • central banking
  • investment decisions

Putting it to work

  • monitor money supply
  • evaluate central bank policy

Questions to consider

  • Is money supply the only cause of inflation?
  • How steady should growth be?

Another view

Other factors like supply shocks can also drive inflation.

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