{"id":36,"date":"2025-05-01T16:48:12","date_gmt":"2025-05-01T20:48:12","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=36"},"modified":"2025-05-22T10:40:05","modified_gmt":"2025-05-22T14:40:05","slug":"the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"<p><em>Originally written on 9\/20\/2022<\/em><\/p>\n<p><span data-contrast=\"auto\">\u201c<\/span><a href=\"https:\/\/www.frbsf.org\/our-district\/press\/presidents-speeches\/williams-speeches\/2012\/july\/williams-monetary-policy-money-inflation\/\"><span data-contrast=\"none\">Inflation is always and everywhere a monetary phenomenon<\/span><\/a><span data-contrast=\"auto\">.\u201d Milton Friedman made this line famous in a talk he gave in India in 1963.\u00a0 In his view, both the cause and the cure for inflation rest squarely with the monetary authorities. Inflation is caused by an excessive expansion of the money supply and is cured by restraining the growth of the money supply.\u00a0 Curbing inflation can be tough on an economy as it typically raises unemployment. But that short-run cost is a reasonable price to pay to avoid the greater economic collapse that comes from a more ruinous inflation.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Inflation is not caused by rising prices of certain &#8220;key&#8221; items or \u201ccritical\u201d inputs. Such non-monetary theories confuse the nature of inflation, as well as its cause and cure. One of the most persistent \u201ctheories\u201d is that rising gasoline prices cause inflation. After all, everything has to be transported, therefore, rising gasoline prices make the price of everything go up. This is very appealing as it suggests the cure to inflation lies in getting gasoline prices to decline.\u00a0 While this may have a ring of plausibility it is wrong.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Disciples of Freidman point out that inflation is by definition an increase in the general price level\u2014that is, an increase in the price of a basket of all goods and services not just a select few. The recent August report for the consumer price index (cpi) makes the point. <\/span><a href=\"https:\/\/www.bls.gov\/news.release\/cpi.nr0.htm\"><span data-contrast=\"none\">Gasoline prices went down by 10.6% from July, but the prices of all goods and services rose by 0.1% over the month<\/span><\/a><span data-contrast=\"auto\">.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">If the decline of gasoline prices was a herald of the end of inflation why did the stock market decline by 4% on the inflation report?\u00a0 Market participants saw the \u201ccore CPI\u201d which strips out volatile food and energy costs <\/span><a href=\"https:\/\/www.bls.gov\/news.release\/cpi.nr0.htm\"><span data-contrast=\"none\">rose by 0.6% from July to August, and by 6.3% in year-over-year measure<\/span><\/a><span data-contrast=\"auto\">.\u00a0 Declining gas prices didn\u2019t and won\u2019t kill that off. There is still too much money chasing too few goods at least to attain the goal the Federal Reserve has committed to, an annual inflation rate of 2%.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">So the Federal Reserve will surely stay the course on its interest rate hikes. In fact, by the time you read this column we will know whether the Fed upped the rate by 0.75% or a full point. Unfortunately, wringing inflation out of this economy looks to be \u201ca hard row of stumps to hoe.\u201d<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Originally written on 9\/20\/2022 \u201cInflation is always and everywhere a monetary phenomenon.\u201d Milton Friedman made this line famous in a talk he gave in India in 1963.\u00a0 In his view, both the cause and the cure for inflation rest squarely with the monetary authorities. Inflation is caused by an excessive expansion of the money supply [&hellip;]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[93,350,349,4,351,317,7,347,346,348,352,318,45,6],"class_list":["post-36","post","type-post","status-publish","format-standard","hentry","category-inflation","tag-cpi","tag-economic-collapse","tag-economy","tag-federal-reserve","tag-gas-prices","tag-goods","tag-inflation","tag-milton-friedman","tag-monetary","tag-money-supply","tag-price-level","tag-services","tag-stock-market","tag-unemployment"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"Originally written on 9\/20\/2022 \u201cInflation is always and everywhere a monetary phenomenon.\u201d Milton Friedman made this line famous in a talk he gave in India in 1963.\u00a0 In his view, both the cause and the cure for inflation rest squarely with the monetary authorities. Inflation is caused by an excessive expansion of the money supply [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:site_name\" content=\"Econ Briefs\" \/>\n<meta property=\"article:published_time\" content=\"2025-05-01T20:48:12+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-05-22T14:40:05+00:00\" \/>\n<meta name=\"author\" content=\"christianhartselle\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"christianhartselle\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/01\\\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/01\\\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\"},\"author\":{\"name\":\"christianhartselle\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#\\\/schema\\\/person\\\/53f4e0b981fd42f34cbb306b9ad62622\"},\"headline\":\"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz\",\"datePublished\":\"2025-05-01T20:48:12+00:00\",\"dateModified\":\"2025-05-22T14:40:05+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/01\\\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\"},\"wordCount\":416,\"commentCount\":0,\"keywords\":[\"CPI\",\"economic collapse\",\"economy\",\"Federal Reserve\",\"gas prices\",\"goods\",\"inflation\",\"Milton Friedman\",\"monetary\",\"money supply\",\"price level\",\"services\",\"stock market\",\"unemployment\"],\"articleSection\":[\"Inflation\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/01\\\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/01\\\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\",\"url\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/01\\\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\",\"name\":\"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#website\"},\"datePublished\":\"2025-05-01T20:48:12+00:00\",\"dateModified\":\"2025-05-22T14:40:05+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#\\\/schema\\\/person\\\/53f4e0b981fd42f34cbb306b9ad62622\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/01\\\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/01\\\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/01\\\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#website\",\"url\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/\",\"name\":\"Econ Briefs\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#\\\/schema\\\/person\\\/53f4e0b981fd42f34cbb306b9ad62622\",\"name\":\"christianhartselle\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g\",\"caption\":\"christianhartselle\"},\"url\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/author\\\/christianhartselle\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/","og_locale":"en_US","og_type":"article","og_title":"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs","og_description":"Originally written on 9\/20\/2022 \u201cInflation is always and everywhere a monetary phenomenon.\u201d Milton Friedman made this line famous in a talk he gave in India in 1963.\u00a0 In his view, both the cause and the cure for inflation rest squarely with the monetary authorities. Inflation is caused by an excessive expansion of the money supply [&hellip;]","og_url":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/","og_site_name":"Econ Briefs","article_published_time":"2025-05-01T20:48:12+00:00","article_modified_time":"2025-05-22T14:40:05+00:00","author":"christianhartselle","twitter_card":"summary_large_image","twitter_misc":{"Written by":"christianhartselle","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/#article","isPartOf":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/"},"author":{"name":"christianhartselle","@id":"https:\/\/people.bsu.edu\/econbriefs\/#\/schema\/person\/53f4e0b981fd42f34cbb306b9ad62622"},"headline":"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz","datePublished":"2025-05-01T20:48:12+00:00","dateModified":"2025-05-22T14:40:05+00:00","mainEntityOfPage":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/"},"wordCount":416,"commentCount":0,"keywords":["CPI","economic collapse","economy","Federal Reserve","gas prices","goods","inflation","Milton Friedman","monetary","money supply","price level","services","stock market","unemployment"],"articleSection":["Inflation"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/","url":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/","name":"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs","isPartOf":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/#website"},"datePublished":"2025-05-01T20:48:12+00:00","dateModified":"2025-05-22T14:40:05+00:00","author":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/#\/schema\/person\/53f4e0b981fd42f34cbb306b9ad62622"},"breadcrumb":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/the-feds-fight-money-vs-inflation-by-dr-cecil-bohanon-and-dr-john-horowitz\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/people.bsu.edu\/econbriefs\/"},{"@type":"ListItem","position":2,"name":"The Fed\u2019s Fight: Money vs. Inflation \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"}]},{"@type":"WebSite","@id":"https:\/\/people.bsu.edu\/econbriefs\/#website","url":"https:\/\/people.bsu.edu\/econbriefs\/","name":"Econ Briefs","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/people.bsu.edu\/econbriefs\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/people.bsu.edu\/econbriefs\/#\/schema\/person\/53f4e0b981fd42f34cbb306b9ad62622","name":"christianhartselle","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g","caption":"christianhartselle"},"url":"https:\/\/people.bsu.edu\/econbriefs\/author\/christianhartselle\/"}]}},"_links":{"self":[{"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/posts\/36","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/users\/112"}],"replies":[{"embeddable":true,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/comments?post=36"}],"version-history":[{"count":0,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/posts\/36\/revisions"}],"wp:attachment":[{"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/media?parent=36"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/categories?post=36"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/tags?post=36"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}