Money Illusion: Market Monetarism, the Great Recession, and the Future of Monetary Policy

Scott Sumner argues that the Great Recession was caused by nominal GDP, which the Federal Reserve erred in allowing to plummet. The Money Illusion is a book-length work on market monetarism, written by its leading scholar, that provides a simple yet fundamentally radical understanding of how monetary policy can work best.

\n Format: Hardback
\n Length: 392 pages
\n Publication date: 03 September 2021
\n Publisher: The University of Chicago Press
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The first book-length work on market monetarism, written by its leading scholar, delves into the possibility that the consensus around what caused the 2008 Great Recession may be entirely wrong. Just as Milton Friedman and Anna Schwartz led the economics community in the 1960s to reevaluate its view of what caused the Great Depression, the same may be happening now to our understanding of the first economic crisis of the 21st century.

By foregoing the usual relitigating of problems such as housing markets and banking crises, renowned monetary economist Scott Sumner argues that the Great Recession came down to one thing: nominal GDP, the sum of all nominal spending in the economy, which the Federal Reserve erred in allowing to plummet.

The Money Illusion is an end-to-end case for this school of thought, known as market monetarism, written by its leading voice in economics. Based almost entirely on standard macroeconomic concepts, this highly accessible text lays the groundwork for a simple yet fundamentally radical understanding of how monetary policy can work best: providing a stable environment for a market economy to flourish.

The book challenges the conventional wisdom that monetary policy is ineffective in promoting economic growth and stability. It argues that the Federal Reserve's focus on inflation targets and interest rate policies has led to misguided policies that have exacerbated economic crises. Instead, the book advocates for a return to the gold standard, which would allow the Federal Reserve to control the money supply and maintain price stability.

The Money Illusion also provides a detailed explanation of how market monetarism works in practice. It explains the role of the money supply in the economy, the relationship between inflation and unemployment, and the ways in which monetary policy can be used to promote economic growth and stability. The book also discusses the historical roots of market monetarism and the contributions of its leading scholars, including Milton Friedman and Friedrich Hayek.

Overall, The Money Illusion is a must-read for anyone interested in economics, monetary policy, and the history of economic thought. It provides a comprehensive and accessible introduction to market monetarism and its potential to transform our understanding of how the economy works.

\n Weight: 698g\n
Dimension: 164 x 235 x 32 (mm)\n
ISBN-13: 9780226773681\n \n