"But this brings us to what I consider the fatal flaw in the monetarist prescriptions.  If the leader of the school cannot make up his own mind regarding what the most desirable rate of monetary increase should be, what does he expect to happen when the decision is put in the hands of the politicians?  …  The fatal flaw in the monetarist prescription, in brief, is that it postulates that money should consist of irredeemable paper notes and that the final power of determining how many of these are issued should be placed in the hands of the government—that is, in the hands of the politicians in office.  The assumption that these politicians could be trusted to act responsibly, particularly for any prolonged period, seems incredibly naive.  The real problem today is the opposite of what the monetarists suggest.  It is how to get the arbitrary power over the stock of money out of the hands of the government, out of the hands of the politicians."

“I do not mean to suggest that all those who call themselves monetarists make this unconscious assumption that an inflation involves this uniform rise of prices.  But we may distinguish two schools of monetarism.  The first would prescribe a monthly or annual increase in the stock of money just sufficient, in their judgment, to keep prices stable.  The second school wants a continuous increase in the stock of money sufficient to raise prices steadily by a "small" amount—2 or 3 per cent a year.  These are the advocates of a "creeping" inflation.  …  I made a distinction earlier between the monetarists strictly so called and the "creeping inflationists."  This distinction applies to the intent of their recommended policies rather than to the result.  The intent of the monetarists is not to keep raising the price "level" but simply to keep it from falling, i.e., simply to keep it "stable."  But it is impossible to know in advance precisely what uniform rate of money-supply increase would in fact do this.  The monetarists are right in assuming that in a prospering economy, if the stock of money were not increased, there would probably be a mild long-run tendency for prices to decline.  But they are wrong in assuming that this would necessarily threaten employment or production.  For in a free and flexible economy prices would be falling because productivity was increasing, that is, because costs of production were falling.  There would be no necessary reduction in real profit margins.  The American economy has often been prosperous in the past over periods when prices were declining.  Though money wage-rates may not increase in such periods, their purchasing power does increase.  So there is no need to keep increasing the stock of money to prevent prices from declining.  A fixed arbitrary annual increase in the money stock "to keep prices stable" could easily lead to a "creeping inflation" of prices.”

“In brief, on net balance, machines, technological improvements, economies and efficiency do not throw men out of work.”

“Every man knows there are evils in this world which need setting right. Every man has pretty definite ideas as what these evils are. But to most men one in particular stands out vividly. To some, in fact, this stands out with such startling vividness that they lose sight of other evils, or look upon them as the natural consequence of their own particular evil-in-chief.”

“Among the most viable of all economic delusions is the belief that machines on net balance create unemployment. Destroyed a thousand times, it has risen a thousand times out of its own ashes as hardy and vigorous as ever. Whenever there is long-continued mass unemployment, machines get the blame anew. This fallacy is still the basis of many labor union practices. The public tolerates these practices because it either believes at bottom that the unions are right, or is too confused to see just why they are wrong. The belief that machines cause unemployment, when held with any logical consistency, leads to preposterous conclusions. Not only must we be causing unemployment with every technological improvement we make today, but primitive man must have started causing it with the first efforts he made to save himself from needless toil and sweat.”

“It is often sadly remarked that the bad economists present their errors to the public better than the good economists present their truths. It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it. But the basic reason for this ought not to be mysterious. The reason is that the demagogues and bad economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases the answer consists in showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups. The answer consists in supplementing and correcting the half-truth with the other half. But to consider all the chief effects of a proposed course on everybody often requires a long, complicated, and dull chain of reasoning. Most of the audience finds this chain of reasoning difficult to follow and soon becomes bored and inattentive. The bad economists rationalize this intellectual debility and laziness by assuring the audience that it need not even attempt to follow the reasoning or judge it on its merits because it is only “classicism” or “laissez-faire,” or “capitalist apologetics” or whatever other term of abuse may happen to strike them as effective.”

“It is with considerable reluctance that I criticize the monetarists, because, though I consider their proposed monetary policy unfeasible, they are after all much more nearly right in their assumptions and prescriptions than the majority of present academic economists.  The simplistic form of the quantity theory of money that they hold is not tenable; but they are overwhelmingly right in insisting on how much "money matters," and they are right in insisting that in most circumstances, and over the long run, it is the quantity of money that is most influential in determining the purchasing power of the monetary unit.  Other things being equal, the more dollars that are issued, the smaller becomes the value of each individual dollar.  So at the moment the monetarists are more effective opponents of further inflation than the great bulk of politicians and even putative economists who still fail to recognize this basic truth.”