SummaryMonetarism became popular amongst, famously, US and UK politicians in the 1980s, coinciding with a period of severe stagflation, and is, to this day, a controversial school of Economics, paradoxically known because of its affinity to various legislatures despite being a firm advocate of the separation between politics and economics.
Milton Friedman, 1912-2006, was an American economist, Professor at the University of Chicago and main figure of the Chicago School. He was awarded the Nobel Prize of Economic Sciences in the year 1976 for his achievements in the fields of consumption analysis, monetary history and theory, and for his studies about the complexity and difficulty of economic stabilizer policies.
He was a great admirer of von Hayek and became one of the main challengers of Keynesian government policies, especially fiscal policy. He was a strong defender of free market and of monetary policy, having written numerous studies on this last topic.
In “A monetary History of the United States, 1867-1960”, 1963, Friedman together with Anna J. Schwartz, analyse the role of money in the business cycle, and argued about the effects of both monetary expansion and contraction. As Friedman said “inflation is always and everywhere a monetary phenomenon”.
Friedman, in his “The Role of Monetary Policy”, 1968, theorized about the existence of a natural rate of unemployment and stated that policies trying to decrease it would be unbeneficial for the economy and bring inflation with it. He foresighted the instability of the Phillips curve and predicted what was later known as stagflation.
Friedman became an economic adviser at the Ronald Reagan administration, and advocated for minimal government intervention.