Journal Article

The Future of Monetarism after Milton Friedman

Abstract: On the fiftieth anniversary of Milton Friedman receiving the Nobel Prize in economics, this article describes the legacy of monetarism: At a time of double-digit inflation in the U.S. and abroad, Friedman’s idea revolutionized monetary policymaking and macroeconomics. In the 1960s and 1970s, his approach led to a new paradigm in money/macroeconomics and monetary policy, including the use of monetary aggregates, monetary rules over discretion, inflationary expectations, and systematic policy to achieve credibility for achieving low inflation. He revived the centuries-old quantity theory of money—making it a useful empirical apparatus that challenged and defeated the prevailing Keynesian orthodoxy that “money didn’t matter.” Friedman’s monetarism has carried forward with the Shadow Open Market Committee, an external watchdog over the Fed’s tendency to follow discretionary policies.

JEL Classification: E31; E32; E51; E52; N10;

https://doi.org/10.20955/r.2026.08

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Review

Publication Date: 2026-07-31

Volume: 108

Issue: 8

Pages: 1-8