Background:
Milton Friedman created monetarism in the 1960's. He was inspired by von Halek, who believed that all socialist and planned economies led to totalitarianism. Friedman released his theory in his book A Monetary History of the United States, 1867-1960, which is based on the fact that monetary policy is the best way to contract and expand the economy. Friedman was the first economist who came up with the theory of the natural rate of unemployment, and advised that no one try to lower the natural rate. He also predicted the concept of stagflation and the weakness of the short run Phillips Curve.