Monetarism

Monetarism Review:

• Another swing in the economic pendulum alternates between interventionism and the free market economy is monetarism.

• The theory holds that control of a country's money supply is the best means to encourage economic growth and limit unemployment and inflation.

• The money supply is controlled through the regulation of interest rates

• Economists like Milton Friedman and Friedrich Hayek believed that the price system, or free market was the only way to balance supply and demand in the economy while  maintaining individual liberty.

Monetarism-

 The adoption of monetarism by Great Britain, the United States and others reflects a swing of the pendulum back to classical liberal principles and away from interventionist practices of Keynesian economics.

• The intervention of governments during and after the depression and WW2 had established a modified market or mixed economy- the intervention side of the pendulum swing- but the advice offered by Keynes had been only partially accepted by governments.

Thatcherism-

Name given to the british economic period under british prime minister margaret thatcher (1979-1990)

• Implemented Austrian economics

• Known for tight control of the money supply (monetary policy)

• Union busting

• Privitization (state-owned industries: coal industry)

Reaganomics-

Name given to the american economic period under U.S President Ronald Reagan (1981-1989)

• Trickle down economics

• Tax cuts to big business and the wealthy

•  Privitization

• Advocate of monetary policy