The myth that money supply controls inflation is being revived. Here's how it failed its most ardent believer—Margaret Thatcher.

The article focuses on Margaret Thatcher's implementation of monetarism during her premiership in the late 1970s and early 1980s, highlighting its significant shortcomings. Thatcher prioritized reducing inflation, which was at 13% when she took office, by adopting Milton Friedman's monetarist theory, which posited that inflation was primarily a monetary phenomenon. Despite her efforts, including raising the Bank of England's discount rate to 17%, the money supply consistently exceeded targets, leading to a severe recession and rising unemployment, which more than doubled during her first term. Ultimately, the article critiques the effectiveness of monetarism in addressing inflation and suggests that Thatcher's attachment to the theory persisted despite its failures. [Extracted from the article]