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When they so-called 'target the interest rate', what…

“When they so-called 'target the interest rate', what they're doing is controlling the money supply via the interest rate. The interest rate is only an intermediary instrument.” quote by Milton Friedman
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“When they so-called 'target the interest rate', what they're doing is controlling the money supply via the interest rate. The interest rate is only an intermediary instrument.”

Milton Friedman

About This Quote

This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.

Interest rates are a tool that indirectly influences the money supply, not the direct lever.

In simple terms: Rates indirectly control money supply.

Key Takeaway

Use rates wisely.

Themes

economics policy inflation control

Mood

analytical cautious

Type

educational technical

When to use this quote

  • budget planning
  • investment decisions
  • inflation targeting
  • financial education

Key Concepts

Monetary transmission central banking

Questions to Reflect On

  • How does rate change affect your savings?
  • What are limits of rate control?
A Different Perspective

Policy effects can be delayed and uncertain.

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