Monetarism The origin of monetarism may be traced in the writings of long line of University
of Chicago’s distinguished teachers and students represented by Milton
K Brunner was the economist who used the term ‘Monetarism’ in 1968.
The monetarist school include Phillip Cagan, James Schlesinger, Leon all Anderson, Meiselman, AH Walters and Allan Meltzer. Monetarism basis lies in the age-old Quantity Theory of Money of 18
Century. So that the QTM is the basis for monetary frame work.
Monetarists are the supporters of the ‘Free Market’ beli
eve that all economic problems have their solution in the free and unimpeded operation of the market forms of supply and demand.
Monetarism refers to the followers of Milton Friedman who hold that “Only Money Matters”. It attributes
the economic variation principally to changes in money supply. They said that the government interference with the working of market forces has mostly failed. According to Milton Friedman, regulation of money supply is one such area where government control is called for but this control must be controlled. Henry Simon who observed that government must provide a monetary
framework for a competitive system, but this should be operate under the ‘Rules of Law’ and not under the discretionary powers of the administration.
In the wake of Keynesian revolution, the emphasis shifted from monetary policy to Fiscal policy. This gives rise to the fiscal school includes James Tobin, P Samuelson, W Heller, L Klien, Modigliani
who suggest the “Money does not matter”.
Since 1930’s thi
s debate has continued, and presently the academic opinion has veered more and more round the monetary fiscal mix.