In an article for the Encyclopedia Britannica, Kellner (2013) stated that [John Maynard Keynes] said that whereas struggling households were bound to spend less in tough times, the same actions by governments could be ruinous. When unemployment was high and factories lay idle, he advocated higher government spending and lower interest rates in order to maintain the level of demand for goods and services and to encourage businesses to borrow and invest.
In the 1970s Inflation rose while economies stagnated. Unemployment in many countries soared. Keynesian demand management no longer seemed to work, and Keyness critics started to attract greater attention.
The two most prominent of these crittics were Friedrich von Hayek [and] Milton Friedman. Hayek argued that government action often did more harm than good: in economic terms, by impeding the operation of market forces, and in political terms, by reducing the freedom that individuals and companies should enjoy to earn, spend, and generally act as they chose. Friedman argued that if governments or central banks increased the money supply, inflation would rise; conversely, if they held it steady, inflation would fall (paras. 3-7).
Given what you have learned in Chapter 15 of the text and the information above from Kellner, do you think like a Keynesian or a Monetarist? In your argument, cite an example from a current news article that helps you make your case. Note: Chapter 15 is all about monetary policy.
Reference
Kellner, P. (2013) The Bitter Face-Off Between Keynesian Economics and Monetarism; Encyclopedia Britannica. Retrieved from https://www.britannica.com/topic/Bitter- Face-Off-Between-Keynesian-Economics-and-Monetarism-The-1905030
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