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The Future of Monetarism after Milton Friedman

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  • Michael D. Bordo

Abstract

On the fiftieth anniversary of Milton Friedman receiving the Nobel Prize in economics, this article describes the legacy of monetarism: At a time of double-digit inflation in the U.S. and abroad, Friedman’s idea revolutionized monetary policymaking and macroeconomics. In the 1960s and 1970s, his approach led to a new paradigm in money/macroeconomics and monetary policy, including the use of monetary aggregates, monetary rules over discretion, inflationary expectations, and systematic policy to achieve credibility for achieving low inflation. He revived the centuries-old quantity theory of money—making it a useful empirical apparatus that challenged and defeated the prevailing Keynesian orthodoxy that “money didn’t matter.” Friedman’s monetarism has carried forward with the Shadow Open Market Committee, an external watchdog over the Fed’s tendency to follow discretionary policies.

Suggested Citation

  • Michael D. Bordo, 2026. "The Future of Monetarism after Milton Friedman," Review, Federal Reserve Bank of St. Louis, vol. 108(8), pages 1-8, July.
    • Handle: RePEc:fip:fedlrv:103602
    DOI: 10.20955/r.2026.08
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    References listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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