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Money and monetary policy for the twenty-first century


  • Jerry L. Jordan


This essay challenges the conventional wisdom about money and monetary policy. The role of money in fostering prosperity is a function of the quality, as well as the quantity, of money. Inflation always harms the performance of an economy. Deflations caused by productivity and innovation can be virtuous. A definition of a non-inflationary environment is set forth. Rapid real growth and low unemployment cannot cause inflation. There is no trade-off between inflation and employment. Higher commodity prices or "weak" exchange rates cannot cause inflation. High market interest rates are a symptom of inflationary policies. Low interest rates are a reflection of successful anti-inflationary policies, not "easy money."

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  • Jerry L. Jordan, 2006. "Money and monetary policy for the twenty-first century," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 485-510.
  • Handle: RePEc:fip:fedlrv:y:2006:i:nov:p:485-510:n:v.88no.6

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    References listed on IDEAS

    1. James M. Buchanan, 1994. "Notes on the Liberal Constitution," Cato Journal, Cato Journal, Cato Institute, vol. 14(1), pages 1-9, Spring/Su.
    2. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-162, May.
    3. Alchian, Armen A, 1977. "Why Money?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 133-140, February.
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