The first book-length work on market monetarism, written by its leading scholar.
Is it possible that the consensus around what caused the 2008 Great Recession is almost entirely wrong? It’s happened before. Just as Milton Friedman and Anna Schwartz led the economics community in the 1960s to reevaluate its view of what caused the Great Depression, the same may be happening now to our understanding of the first economic crisis of the 21st century.
Forgoing the usual relitigating of problems such as housing markets and banking crises, renowned monetary economist Scott Sumner argues that the Great Recession came down to one thing: nominal GDP, the sum of all nominal spending in the economy, which the Federal Reserve erred in allowing to plummet. The Money Illusion is an end-to-end case for this school of thought, known as market monetarism, written by its leading voice in economics. Based almost entirely on standard macroeconomic concepts, this highly accessible text lays the groundwork for a simple yet fundamentally radical understanding of how monetary policy can work best: providing a stable environment for a market economy to flourish.
"This thoughtful and broad-ranging critique of the post-financial crisis consensus on macroeconomic policy is worth reading for anyone interested in monetary policy. . . . Some may wonder why anyone today would write (or read) a book raking over the [2008] financial crisis, when the world has moved on to dealing with the pandemic, war in Europe, and how to manage economic policy in an era of wild political see-saws. In fact, Sumner’s book is of great significance to our current crises, and his challenge to conventional wisdom is bracing." - Times Literary Supplement
"Were I still teaching monetary economics, I wouldn't hesitate to assign it, not as a textbook, but as the testament of one of today's most original monetary economists. For The Money Illusion is capable of teaching them something no textbook ever will, namely, the importance of thinking for oneself." - Barron's
"[An] illuminating journey of our macroeconomic past, and the shrouded role that monetary mismatches played in past recessions. . . . It's the kind of book where you learn something on every single page—often several astonishing things." - Frontier Post
"The leading authority on market monetarism re-evaluates the 2008 Recession, rejecting the consensus on the origins of the crisis, and narrows it down to a single cause: allowing the nominal GDP to plummet." - Bookseller (UK)
