, Columnist
Money Doesn’t Make America’s Economy Go Around
“Money printer go brrrrr” doesn’t describe how Federal Reserve policy actually operates.
Not how monetary policy works.
Photographer: Alex Wong/Getty ImagesThis article is for subscribers only.
Internet memes and pundits alike often display a specific understanding of how the US economy works: that the sheer volume of money is the most important determinant of output and prices. Following their logic, the Federal Reserve’s pandemic-related expansion of the money supply caused today’s inflation, and its current contraction will quickly crush inflation and trigger a recession.
If only the Fed’s job were that simple. Such thinking is wrong, in at least two ways.