<p>Friedman has stated in his "<a href="https://en.m.wikipedia.org/wiki/Friedman%27s_k-percent_rule" rel="nofollow noreferrer">k-precent rule</a>" that the money supply should <strong>increase</strong> by a fixed percentage each year.</p>

<p>On the other hand, the "<a href="https://en.m.wikipedia.org/wiki/Friedman_rule" rel="nofollow noreferrer">Friedman rule</a>" states that the nominal interest rate should be 0, (which would cause <strong>deflaction</strong>).</p>

<p><strong>Am I correct in thinking that Friedman is contradicting himself here?</strong></p>

<p>Something else that seems to contradict the Friedman rule: he at a different point has stated that he would be in favor of a gold standard, which would effectively mean that the money supply would grow by an amount that depends on whatever gold production is, which is generally a small percentage.</p>

CC BY-SA 4.0
2018-05-03T17:59:51.510Z
What does the last paragraph have to do with with your question?
Giskard
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2018-05-03T18:07:35.953Z
This is essentially another example of a policy prescription that contradicts the Friedman rule.
user56834
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2018-05-04T01:29:51.750Z
Not a big fan of Friedman, but it is possible that the money supply could grow at k% per year with the nominal rate stuck at 0%. However, I think these “rules” came up in different contexts, and Friedman himself did not label them as “Friedman Rules”; that was done by others afterward.
Brian Romanchuk
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2018-05-04T09:17:37.370Z
@brianRomanchuk, if the real interest is positive (which it usually is), and the nominal interest rate is 0, then inflation must be negative, and according to friedman's own belief in the quantity theory of money, money supply has to go down. Maybe we should just conclude from this that Friedman concluded two things that are mutually contradictory, maybe he changed his mind?
user56834
CC BY-SA 4.0
2018-05-04T10:34:36.990Z
@Programmer2134 - the real policy interest rate in the US has been negative for almost a decade. In any event, these rules showed up in different contexts. The 0% nominal rate rule is a theoretical result, and I don’t think it was a policy recommendation of his.
Brian Romanchuk
CC BY-SA 4.0
2018-05-04T14:40:41.047Z
@brianromanchuk, the real interest rate has been negative due to the crisis, but thia is not normal and definitely wasnt during friedmans time. In any case, maybe youre right about it not being a policy recommendation
user56834
<monetary-policy><friedman>
Friedman rule vs Friedman's k-percent rule
user56834
# Friedman rule vs Friedman's k-percent rule

(Asked by: username_0 on 2018-05-03)

Friedman has stated in his "[k-precent rule](https://en.m.wikipedia.org/wiki/Friedman%27s_k-percent_rule)" that the money supply should **increase** by a fixed percentage each year.

On the other hand, the "[Friedman rule](https://en.m.wikipedia.org/wiki/Friedman_rule)" states that the nominal interest rate should be 0, (which would cause **deflaction**).

**Am I correct in thinking that Friedman is contradicting himself here?**

Something else that seems to contradict the Friedman rule: he at a different point has stated that he would be in favor of a gold standard, which would effectively mean that the money supply would grow by an amount that depends on whatever gold production is, which is generally a small percentage.

**Tags:** monetary-policy, friedman
> **Comments:**
> **username_1**: What does the last paragraph have to do with with your question?  
> **username_0**: This is essentially another example of a policy prescription that contradicts the Friedman rule.  
> **username_2**: Not a big fan of Friedman, but it is possible that the money supply could grow at k% per year with the nominal rate stuck at 0%. However, I think these “rules” came up in different contexts, and Friedman himself did not label them as “Friedman Rules”; that was done by others afterward.  
> **username_0**: @brianRomanchuk, if the real interest is positive (which it usually is), and the nominal interest rate is 0, then inflation must be negative, and according to friedman's own belief in the quantity theory of money, money supply has to go down. Maybe we should just conclude from this that Friedman concluded two things that are mutually contradictory, maybe he changed his mind?  
> **username_2**: @Programmer2134 - the real policy interest rate in the US has been negative for almost a decade. In any event, these rules showed up in different contexts. The 0% nominal rate rule is a theoretical result, and I don’t think it was a policy recommendation of his.  
> **username_0**: @brianromanchuk, the real interest rate has been negative due to the crisis, but thia is not normal and definitely wasnt during friedmans time. In any case, maybe youre right about it not being a policy recommendation  

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## 0 answers

