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Money and monetary policy for the twenty-first century

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  • Jerry L. Jordan

Abstract

This essay challenges the conventional wisdom about money and monetary policy. The role of money in fostering prosperity is a function of the quality, as well as the quantity, of money. Inflation always harms the performance of an economy. Deflations caused by productivity and innovation can be virtuous. A definition of a non-inflationary environment is set forth. Rapid real growth and low unemployment cannot cause inflation. There is no trade-off between inflation and employment. Higher commodity prices or \\"weak\\" exchange rates cannot cause inflation. High market interest rates are a symptom of inflationary policies. Low interest rates are a reflection of successful anti-inflationary policies, not \\"easy money.\\"

Suggested Citation

  • Jerry L. Jordan, 2006. "Money and monetary policy for the twenty-first century," Review, Federal Reserve Bank of St. Louis, vol. 88(Nov), pages 485-510.
    • Handle: RePEc:fip:fedlrv:y:2006:i:nov:p:485-510:n:v.88no.6
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    References listed on IDEAS

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    Keywords

    Monetary policy;

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