Friedman's k-percent rule
Hey there kiddo, have you ever heard of Milton Friedman and his k-percent rule? No? Alright, let me break it down in a way that you can understand.
Milton Friedman was a smart man who studied economics - this is the study of money and how people use it. He came up with an idea that said the government should only increase the amount of money in circulation by a certain amount each year. This certain amount was called the k-percent. For example, if the k-percent was 3%, then the government would only increase the amount of money in circulation by 3% each year.
Now, why did Friedman think this was a good idea? Well, he believed that if the government just printed more and more money, it would lead to inflation - this is when things cost more and more because the money is worth less and less. So, if the government only increased the amount of money in circulation by a certain amount, it would keep inflation under control.
Think of it like this: imagine you have a toy box with only a few toys in it. You want more toys, so you keep asking your parents to buy you more. But if you keep getting more and more toys, eventually, you'll have too many toys and you won't know what to do with them all. That's kind of like what happens if the government just keeps printing money without any limits - it becomes too much and it's not worth as much anymore.
So, the k-percent rule is a way of keeping the amount of money in circulation at a steady pace, so we don't end up with too little or too much of it. It's a way of making sure that our money stays valuable and we can buy the things we need without them getting too expensive.
Does that make sense, kiddo?
Milton Friedman was a smart man who studied economics - this is the study of money and how people use it. He came up with an idea that said the government should only increase the amount of money in circulation by a certain amount each year. This certain amount was called the k-percent. For example, if the k-percent was 3%, then the government would only increase the amount of money in circulation by 3% each year.
Now, why did Friedman think this was a good idea? Well, he believed that if the government just printed more and more money, it would lead to inflation - this is when things cost more and more because the money is worth less and less. So, if the government only increased the amount of money in circulation by a certain amount, it would keep inflation under control.
Think of it like this: imagine you have a toy box with only a few toys in it. You want more toys, so you keep asking your parents to buy you more. But if you keep getting more and more toys, eventually, you'll have too many toys and you won't know what to do with them all. That's kind of like what happens if the government just keeps printing money without any limits - it becomes too much and it's not worth as much anymore.
So, the k-percent rule is a way of keeping the amount of money in circulation at a steady pace, so we don't end up with too little or too much of it. It's a way of making sure that our money stays valuable and we can buy the things we need without them getting too expensive.
Does that make sense, kiddo?
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