New Money Review podcast

New Money Review podcast

Why monetarism is common sense

September 04, 2023

In the latest episode of the New Money Review podcast I’m delighted to welcome Tim Congdon, an economist and leading advocate of monetarism.

After a successful career in the City, Tim became founder and chair of the Institute of International Monetary Research at the University of Buckingham.

I’ve followed his work for over three decades.

In the early 1990s, when I was working as a bond fund manager, the UK’s central bank was keeping interest rates at over 10% in an attempt to make sterling shadow the deutsche mark.

Tim forecast that UK interest rates would soon fall from double figures, based on sluggish money supply growth that, in his view, meant a recession was coming.

In the end, the Bank of England had to abandon its exchange rate target, sterling rates fell sharply and—as I had followed Tim’s advice rather than the consensus view—my fixed income clients did very well.

Now we seem to be repeating the same, or at least a similar story.

Listen to the podcast for more. In this episode, we discuss:

  • Why Congdon became a monetarist
  • How money supply figures gave advanced warning of inflation in early 2020
  • Why central bankers’ interest-rate-only macroeconomics is wrong
  • Why we should assess central bankers’ performance against money supply targets
  • Why quantitative easing was necessary in 2008/09
  • Why low money supply growth now presages a recession
  • Why we will soon see falling interest rates
  • Why the basic principles of monetarism are common sense
  • How money supply targeting could help dampen boom/bust cycles
  • Why CBDCs could affect the way we measure money