Other Publications
Monetary policy is not about interest rates, it’s about the money supply
A common view is that monetary policy is all about interest rates: higher rates for a tighterpolicy, lower rates for an easier policy. But this is at best superficial. Interest rates arethemselves subject to the rate of inflation, which depends on money growth over thepreceding two years or more. Illustrating with three different examples, Prof. Steve Hankeand I show that money growth is what really matters for inflation, and in turn for interest ratelevels in the particular countries. Read the full article on Fortune →
Other Publications
Fed Chair Jerome Powell is trying to explain away the inflation rollercoaster – but money supply is absent from his script
In this op-ed from August 2024 Prof. Steve Hanke and I dismissed the widespread notionthat the post-Covid inflation was a worldwide phenomenon. Summarising a study weconducted of 27 developed and emerging economies, we found very different rates ofinflation. The common theme was that those which had higher inflation had allowed moneyto grow rapidly, while those with lower or negligible inflation had kept money growth firmlyunder control. Central bank governors like Jerome Powell at the Fed or Andrew Bailey at theBank of England were wrong to blame external factors such as supply chain disruptions orthe Ukraine war for domestic inflation. Inflation is always and everywhere a monetaryphenomenon. Read the full article on Fortune →