rates that motivated people to borrow. ) i will base the following arguments on the classic work of friedman and schwartz ( 1963 ), as well as on my own article for politicka ekonomie ( michl, 2019 ), a study by borio et al. ( 2023 ) for the bank for international settlements and a lecture by isabel schnabel from the ecb ( schnabel, 2023 ). for further discussion, i recommend frait ( 2023 ), mandel and dvoak ( 2022 ) and the 12 - year - old yet still forward - looking article by my colleague eva zamrazilova zaarovany kruh levnych penz [ the vicious circle of cheap money ] ( zamrazilova, 2011 ). in macroeconomic theory, inflation is most often defined as sustained growth in the price level caused by too much money being issued. we don ’ t explain high inflation by going through each item of the consumer basket and trying to give reasons for the cost of potatoes, cars or shirts. we explain it by looking at the quantity of money in the economy, which we denote by m ( for money ). according to friedman and schwartz ( 1963 ), there is a relation between changes in the quantity of money ( m ) and changes in nominal income ( p * y ), but over a time scale of decades, the rate of growth of money ( m ) primarily affects prices ( p ). in the authors ’ view, real output depends in turn on factors such as the enterprise and inventiveness of 2 / 6 bis - central bankers'speeches individuals and firms and on the institutional environment. they inferred from this that “ inflation is always and everywhere a monetary phenomenon ”, in the sense that it is and can only be produced by money growing faster than output. in my article, i tested the relationship between money in the economy and consumer price inflation on us data from 1959 to 2018, for which the longest time series are available ( michl, 2019 ). only before the financial crisis ( from 1959 to 2008 ), however, was there a relationship between m2 and consumer price inflation ( and then only at the 10 % significance level and only according to the engle - granger test ). given that there was no relationship for the full period of 1959 – 2018 and that there was one for the precrisis period, i can state that the one which existed

23 october ). governor's opening remarks at the cnb discussion forum [ audiovisual recording ]. czech national bank. michl, a. ( 2023, 5 january ). zanme spoit. a to hned! [ let us start saving. now! ] mlada fronta dnes. 6 / 7 bis - central bankers'speeches ministry of finance of the czech republic. ( 2023a ). ozdravny baliek 2024 / 2025 [ recovery package 2024 / 2025 ]. ministry of finance of the czech republic. ( 2023b ). piloha tiskove zpravy k ozdravnemu baliku 2024 / 2025 [ annex to the press release on recovery package 2024 / 2025 ]. novakova, m. ( 2023, 3 may ). interview with eva zamrazilova, cnb deputy governor : " vtsina bankovni rady vidi riziko, ktere pichazi z fiskalni politiky a trhu prace " [ " the majority of the bank board sees a risk coming from fiscal policy and the labour market " ]. t24. rajan, r. ( 2023 ). less is more. finance and development magazine, march 2023, 11 – 14. teply, p. ( 2023, 2 march ). neni to prav konzistentnost a transparentnost nb, co pispiva k tlumeni inflace? [ is it not the cnb's consistency and transparency that is helping dampen inflation? ] hospodaske noviny. 7 / 7 bis - central bankers'speeches