In a more just world, Milton Friedman’s monetarism would be described as a monetary variation of Keynesianism. Because that’s what it was, and is.

This simple truth requires routine repeat as the myth of “monetary accommodation” is thrown around by people who should know better. They claim the Fed, by fiddling with interest rates (as in, intervening in the marketplace), can boost the circulation of monetary units in the economy. No, the Fed cannot do that.

To see why so-called “monetary accommodation” is a myth, it’s best to revert to first principles of economics. One of the most elementary ones is that governments have no resources. Said another way, governments only have spending power insofar as they have taxable access to production.

Which is a reminder that when Keynesian economists (meaning nearly all economists) claim government spending boosts economic growth, they’re lying. They’re also double counting.

That government spending couldn’t add to economic growth is merely a statement of the obvious. Seriously, how could government taxing or borrowing away wealth, then circulating it through Washington so that it can be allocated in centralized, politicized fashion, boost economic growth? In the question hopefully the sentient will see that government spending not only follows actual economic growth, it also occurs to the detriment of production, and by extension growth.

After that, just consider the GDP measure that economists worship. It rises the more that governments spend. But governments can only spend after they’ve extracted the consumptive fruits of private production, For economists to then pretend that government spending boosts GDP growth is for them to double count. The growth already happened, thus the spending. Without the production, there is no spending.

Remember this with the impossibility that is “monetary accommodation” top of mind. There’s no such thing. “Monetary accommodation” implies that governments have resources, that by increasing or shrinking so-called “money supply,” governments can expand or contract the economy.

Except that money in circulation isn’t an effect of an accommodative central bank, rather it’s an effect of production. Where there’s abundant production there’s money in abundance to facilitate the exchange of production, and where there’s scant production money there is scant money in circulation.

Taking it further, money buys nothing. Only production buys production at which point various monetary media circulate to reflect a little or a lot of production.

Implicit in a “monetary accommodation” narrative that just won’t die among economists, governments can increase demand by increasing the dollar units in circulation. No, they can’t do that.

To say they can is the equivalent of the popular view among economists that governments can increase “demand” in the economy through greater amounts of spending. The viewpoint is abjectly foolish, and at odds with reality.

Production buys production, always and everywhere. Which means governments can’t increase demand by spending, they can only alter the makeup of the spenders through their taxing power.

The truth about Say’s Law and the origins of all demand don’t change when “money” enters the equation. While governments have control of the “legal tender” they issue, they don’t have control over the exchange media that facilitate the exchange of products for products.

Producers, and producers alone, decide which exchange media circulate and in what quantity. “Legal tender” means nothing to producers as the global circulation of the dollar indicates.

Which is a reminder yet again that “monetary accommodation” as a driver of growth is a myth on par with government spending as a growth accelerant. The sole driver of money in circulation is production, nothing else. Friedman’s monetarism never rejected Keynesianism as much as it mirrored it.