#Bitcoin #MoneySupply #MiltonFriedman
Hey, fellow crypto enthusiasts! 🚀 Have you ever wondered if the renowned economist Milton Friedman would actually support a system with a fixed money supply, like our beloved bitcoin? 🤔
I’ve been seeing a lot of chatter within the community claiming that Friedman is “their guy” and would be a fan of the fixed supply concept. But hang on a minute, let’s take a closer look at this.
Friedman was known for his belief in free-market economies and minimal government intervention. However, he also emphasized the importance of a flexible monetary policy to prevent downturns in the economy. So, would he truly advocate for a fixed money supply system?
I’m not entirely convinced. 💭 What do you all think? Would Friedman really stand behind a fixed money supply, or do you think he might have some reservations? Let’s discuss! 🤓
Vote in the poll below and let’s get to the bottom of this mystery together! 📊 And don’t forget to share your thoughts and insights in the comments. Let’s see if we can crack this case wide open! 💡 #CryptoDebate #EconomicTheory #JoinTheDiscussion 🌐
Friedman proposed several different “rules” that might guide monetary policy, none of which stipulate that the actual money supply would be fixed.
https://en.wikipedia.org/wiki/Friedman%27s_k-percent_rule
https://en.wikipedia.org/wiki/Friedman_rule
He was also a proponent of the QTM
https://en.wikipedia.org/wiki/Quantity_theory_of_money
And the equation of exchange, MV=PY, whereas M=money supply, V=velocity of money, P=price level and Y=real output, shows us that if the economy grows (and thus Y grows), a constant M leads to a falling P, in other words, deflation, and *not* a steady price level.
So I don’t think there’s much support for the idea that Friedman would advocate for a constant money supply.
If anything I’d say this is a butchering of the classic Friedman quote
>Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.
All kinds of cranks love to misuse this quote to support things it doesn’t. *At best* this means that inflation happens when the *growth rate* of the money supply exceeds the growth rate of output. Given that economies do in fact grow the vast majority of the time, this means in practice that *both* the money supply and output would have to grow (and specifically at th same rate) to avoid inflation.