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The Ms = GDP monetary rule was created by Milton Freidman in 1963. He said that the annual money supply growth rate should never exceed
The Ms = GDP monetary rule was created by Milton Freidman in 1963. He said that the annual money supply growth rate should never exceed the annual real GDP growth rate, otherwise the nation would suffer from inflation. Indeed, from the end of the Civil War until the early 1900s (roughly 50 years), a dollar was a dollar. It held its purchasing power because the U.S. government could not just print money out of thin air like the Federal Reserve Bank does today. But in today's world, our dollar purchasing power goes down as the U.S. government (Congress + corrupt politicians) put heavy pressure on the Federal Reserve to print money to pay for government programs that are often filled with waste, fraud, and abuse at all levels. Question: If we continue on our current trajectory of power-hungry politicians rolling out "questionable" new multi-trillion dollar spending programs (i.e. climate change, stimulus checks), forcing the Fed to print more money, since the taxes collected can't cover all the costs, then what will ultimately be the result? Multiple Choice It will be more difficult to grow the macro economy in terms of real GDP, higher real incomes, upward wealth mobility, and the
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