What is a Post Monetarist Economy

Post Monetarism is an Absence of a Money Quantity Target in an Endogenous Money System

Monetarism was the dominant economic paradigm from 1971 to 2001, and the basic template used to manage the US economy during that time frame. I define monetarism as a fiat money system which tries to control the price level and/or balance economic activity by targeting the quantity of the money stock in circulation. This is often referred to informally as the "money supply", although supply indicates a relation between quantity and price, and not simply a quantity available. So money supply is simply a function describing how the quantity of money created or destroyed relates to the price level.

The problem with this is that this alone is indeterminate, and the quantity of money does not provide enough information to determine or control changes to the price level.

I am defining post monetarism as a fiat money system, more specifically, an endogenous money system, that does not use a specific money quantity target to control the price level.

While Reagan's policies embraced a fiscally expansive economy, it was not until about 2001, in the wake of the 90's growth, dot com bubble, as well as geopolitical events like the attack on the world trade center, that monetarism was completely and explicitly abandoned as a guide to economic policy.

I would credit the end of monetarism as playing a significant role in the 2008 crash, not that monetarism was effective in preventing financial instability, only that we used a poor growth mechanism: real estate and general asset price growth, to drive economic expansion in the wake of the failed monetarist experiment.

A strong entry level job market, whether that is achieved through public measures or private enterprise, leading to a thriving developing class is in my opinion, the most effective way to get consistent and sustainable growth. The housing bubble was the exact opposite of this, and it predictably collapsed. Trying to grow off of appreciation of exclusive asset classes, is a poor formula, and tends to undermine itself. By that I mean investments and assets for the ultra-wealthy.