[Music] just how important is money hi guys welcome to ecaholics explains let's talk about monetarism today one school of economic thought called monetarism stated that the money supply or the total amount of money in an economy is the chief determinant of current money gdp in the short run and the price level in the long run monetary policy uses instruments such as interest rates to adjust the amount of money in the economy monetarists believe that the objective of monetary policy are best met by targeting the growth rate of the money supply monetarism gained prominence in the 1970s bringing down inflation in the united states and united kingdom and greatly influenced the u.s central bank's decision to stimulate the economy during the global recession of 2007 to 2009. today monetarism is mainly associated with nobel prize winning economist milton friedman in his work he argued that poor monetary policy by the u.s central bank the federal reserve was the primary cause of the great depression in the united states in the 1930s in his view the failure of the fed to offset forces that were putting downward pressure on the money supply and its actions to reduce the stock of money were actually the opposite of what should have been done they also argued that because markets naturally move towards a stable center and incorrectly set money supply caused markets to behave erratically although the keynesian school later criticized monetary school of thought yet something can be summarized probably the most important is that inflation cannot continue indefinitely without increasing in the money supply and controlling it should be the primary responsibility of the central bank