Confusion about Money and Inflation

Under the influence of Professor Milton Friedman and other “monetarists” it has become fashionable for politicians and economists to discuss the rise of prices in relation to what they call “the money supply”.

Thus the City Editor of the Daily Mail, 18th November 1974:

Some experts say the money supply tells us how bad inflation is going to be in the months ahead. The increase of just 1¾ per cent in the past three months looks hopeful.

And in July last Mr. Healey said:

We have the rate of increase of the money supply under control. I propose to keep it so.