# Monetarism

*Macro & Economy — Finicade finance glossary*

Monetarism argues that inflation is caused by money supply growth outpacing output, so central banks should target steady money growth.

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.

**Also known as:** monetarist, Friedman monetarism

**Related terms:** [Quantity Theory of Money](https://finicade.com/glossary/quantity-theory-of-money), [Money Supply](https://finicade.com/glossary/money-supply), [Inflation](https://finicade.com/glossary/inflation), [Keynesian Economics](https://finicade.com/glossary/keynesian-economics), [Central Bank](https://finicade.com/glossary/central-bank)

**Taught in:** Macro & Markets — A Short History of Macro Thought

Source: https://finicade.com/glossary/monetarism