Opinion of Monetarism

[Uncle Albert/Admiral Halsey]

What do you guys think?

[ag]

What do you guys think?

I'd really prefer not to have such polls here. I might understand what a horrible theory is. I have no clue what a FF theory would be. Would you mind choosing terms that make sense?

Now, this is non-moderatorial. If you insist on making ridiculous polls on this board, there is nothing I can do about it ))

[Uncle Albert/Admiral Halsey]

What do you guys think?

I'd really prefer not to have such polls here. I might understand what a horrible theory is. I have no clue what a FF theory would be. Would you mind choosing terms that make sense?

Now, this is non-moderatorial. If you insist on making ridiculous polls on this board, there is nothing I can do about it ))

Sorry about the confusion. Forgive me if you already know what FF and HP mean, but FF means Freedom Fighter (and thus has a good connotation), while HP means Horrible Person (and thus has a bad connotation). Thus, an FF theory is a good theory, and an HP theory is a bad theory (the terms FF and HP get used a lot on other boards on this forum, though maybe. Once again, forgive me if you already knew what FF and HP meant. And once again, sorry for the confusion.

So is monetarism a good theory or bad theory?

[ag]

I know it full well - I've been on these forums forever )))

However, we are talking theories and economics here, not people. A theory that fights for freedom or anything else is a horirble theory almost by definition )  So, as a boring econ prof., I insist on the proper definition of the terms )

[Uncle Albert/Admiral Halsey]

Oh, OK. I almost never venture onto the economics board, so if I appear like an idiot on this board, that would be why.

So with what terms would you like to discuss monetarism on then?

[ag]

Is it sensible?

[Filuwaúrdjan]

I suppose you could look at the impact of monetarist policies on the economies and societies in which they've been attempted, look at whether they have been successful* and so on (the answers usually being 'negative' and 'no'). Or you could look at it from a theoretical point of view or something.

*Which, I guess, opens up the possibility of a debate regarding the nature of 'success' in policy.

[Gustaf]

It's a bit vague.

Al, the introduction of independent central banks to control inflation I think should be seen as an effect of applying monetarist theories that is undoubtedly good.

I suspect you're thinking about stuff like Thatcher closing down coal mines when you talk about negative impacts, but monetarists probably wouldn't see those as effects of their policy, but rather of the policies that preceded them. (which is debatable in itself).

[Filuwaúrdjan]

I suspect you're thinking about stuff like Thatcher closing down coal mines when you talk about negative impacts,

Not the pit closures, no. That was political; had nothing to do with any economic theory. I was thinking more of the impact on manufacturing; both in terms of the immediate impact (mass unemployment) and the long-term legacy (restructuring of the economy around financial services and the South East, long-term structural problems in the old industrial districts and cities; Birmingham has never really recovered from the recession of the early 1980s, for example). The chain of causation - and this has been looked at by a lot of people over the years - is pretty clear.

Of course monetarist policy in 80's Britain ultimately failed on its own terms, which is why the Thatcher government eventually abandoned it.

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They probably would (if there are any left), but I see no reason to take their opinions on the matter seriously.

[Southern Senator North Carolina Yankee]

Although I have used the term at times to describe myself, I do however find that it or any economic philosphy is not always going to provide all of the answers to every problem from a political standpoint. From an economics perspective I think that Monetarism is gets it wrong that Inflation is caused 100% by increases in the money supply as other factors can effect and cause inflation such as rapid changes in the supply of crucial product could cause inflation in a recession. But to an extent some of its arguements are correct. Especially the importance and impact of monetary policy on economy. I would argue the acts of the Fed to expand the money supply, had more impact in stablizing the banks, and creating the overal economy, then did Tarp, or  the Stimulus. Not to say that we shouldn't have had one, but you reach a point where monetary policy is ineffective and saving a few more points on the 10 or 30 year rate, really isn't going to do much more to help overall output. At that point, in a situation like the present, more answers are required at the micro level to solve outstanding issues like oversupply of housing, cars, structural shifts in employement, etc etc.

[Beet]

As I understand it, it is just an elaboration of the quantity theory of money with policy prescriptions. It's useful as a concept and tool, but certainly not the only one in the toolbox.