Running on M3

摘要

Once, a central banker who did not believe in monetarism would have been viewed as equivalent to a priest who admits to being an atheist. A quarter of a century ago, control of money was seen as both necessary and sufficient to curb infla-tion-so most central banks set monetary targets. Monetarism has since become unfashionable. Financial deregulation and innovation made the money supply harder to interpret, let alone control. As the link between money and prices seemingly broke down, central banks scrapped money targets and instead focused on inflation directly. Or as Gerald Bouey, a former governor of the Bank of Canada, once said, "We didn't abandon the monetary aggregates, they abandoned us."