A major focus of Scott Freeman's work on monetary theory has been the puzzling observation that innovations in the nominal money stock tend to precede innovations in real output. This observation has suggested to many that by printing more money we can affect an increase in real output. When such inflationary policies are actively pursued, however, the predicted increase in real output does not occur.
Freeman proposes that it is inside money which is strongly correlated with real output.
A correlation is found between innovations in the money stock and innovations in real output, but in no way does the change in the money stock cause the change in output. A second focus is on the payments system, the arrangement that arises to facilitate the repayment of debt.