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Monetarism’s Muddles

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Weintraub, S. Monetarism’s Muddles. Credit and Capital Markets – Kredit und Kapital, 14(4), 463-495. https://doi.org/10.3790/ccm.14.4.463
Weintraub, Sidney "Monetarism’s Muddles" Credit and Capital Markets – Kredit und Kapital 14.4, 1981, 463-495. https://doi.org/10.3790/ccm.14.4.463
Weintraub, Sidney (1981): Monetarism’s Muddles, in: Credit and Capital Markets – Kredit und Kapital, vol. 14, iss. 4, 463-495, [online] https://doi.org/10.3790/ccm.14.4.463

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Monetarism’s Muddles

Weintraub, Sidney

Credit and Capital Markets – Kredit und Kapital, Vol. 14 (1981), Iss. 4 : pp. 463–495

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Article Details

Weintraub, Sidney

Abstract

Monetarism’s Muddles

This paper treats the theory of monetarism in both its theoretical and applied aspects, including its nebulous concept of the money stock, its uncorroborated assumptions of money velocity, its erroneous causal train of money and the price level, its neglect of the tic between pay hikes and the price march, and its follies in advocating rigid money supply policies, and denying the need for central bank monetary discretion, in an interdependent world economy where adventitious money and interest rate policies in one big country, such as the United States, are rather instantly transmitted to affect other economies, such as Germany. Western economies have been reeling under the triple distaser of zooming prices, excessive unemployment, and extravagant interest rates by virtue of the monetarist policies of our times. Stagflation and slumpflation are literally new and strange experiences engendered by doctrinaire monetarism which has been impervious to the implications of the persistent pay escalation, managed a bit better in Germany than elsewhere because of the presence of “gastarbeiters” and a more cooperative attitude of trade unions. But the relations will have to be formalized through Incomes Policies so that central banks can devote their full energies and formidable monetary instruments to cope with output levels, interest rates, and foreign exchange rates, without fear and trepidation of inflationary impulses.

Table of Contents

Section Title Page Action Price
Sidney Weintraub: Monetarism's Muddles 463
I. Aspects of Macroeconomic Policy 464
II. Money and Monetarism 465
1. Monetarist Wings 466
2. The Monetarist Indictment 466
III. Monetarism's Egregious Half-Truth 467
IV. The Bewildering Array of Monies 469
V. Velocity in the Old Quantity Theory (OQTM) and the Monetarism 471
1. Velocity as an Absolute and Relative Magnitude 471
2. Recent Evidence 472
VI. Looseness on Lags 473
VII. The Elusive Real Sector Stability and Actual Financial Market Instability 474
VIII. Basic Monetarist Formulas 476
1. The Old QTM 476
2. The \"New\" Quantity Theory 477
IX. The Wage Cost Markup Theory 478
1. Price Level Regardless of Money Sleight of Hand 479
2. Everyone a Billionaire? 480
X. Monetary Policy in a Continuing Economy 480
XI. Consumer Price Levels and the Open Economy 482
1. The Consumer Price Level 482
2. The Open Economy 482
XII. The Ultimate Monetarist Muddle 483
1. Monetarist Frustration 484
2. The WCM Analysis of the Price-Production Split 484
3. The Monetarist Dubious Rule 485
4. The P-Q Matrix of Economic Possibilities 486
5. Qualifying Proviso 487
6. Non-Reproducible Goods and Speculative Markets 488
XIII. Nonfeasible Price and Wage Controls 488
1. The Nonfeasibility of Price and Wage Controls 489
XIV. TIP: A Tax-Based Incomes Policy 489
1. Some TIP Implications 490
2. Collective Bargaining as an Obsolete Institution 491
XV. The International Culmination and Opportunity 492
Zusammenfassung: Monetaristische Wirrnisse 494
Summary: Monetarism's Muddles 494
Résumé: Chaos monétariste 495