Monetarism

Monetarism argues that inflation is caused by money supply growth outpacing output, and that central banks should target steady money growth rather than fine-tune demand. Its policy moment came with the Volcker disinflation of the early 1980s, which crushed inflation at the cost of a deep recession. Strict money targeting was abandoned when the relationship between money and prices proved unstable, but its emphasis on credible inflation control survived and became orthodoxy.