Historically, informedness of economic agents via price stability has been a rationale for the money supply rule derived from the Quantity Theory of Money. The monetarists maintain that changes in the price level are attributable to the level of the money supply; hence, a money supply rule is...

Perceptions of money do influence monetary policy, and monetary policy does have an impact on the functioning of the economy. For instance, a high interest rate policy usually entails high levels of bankruptcies and unemployment. Also, given a loss of confidence in the issuing authority...