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In the late sixties, an economic debate began between East Coast economics departments (saltwater universities) and midwestern colleges (freshwater universities). Milton Friedman, the spokesperson for the freshwater universities, made the claim that "money mattered." Others in the Midwest took this perspective and ran with it to the point where they asserted that "only money mattered."

Friedman made his point to take on the Keynesians at the saltwater institutions, who for decades had argued it was deficit spending that determined economic activity. Monetary issues tended to be ignored in the standard Keynesian model. If asked, proponents would assert that "liquidity" traps essentially made monetary actions useless.

The debate was eventually resolved, at least partially, when Friedman, Paul Samuelson, and Robert Solow (all Nobel laureates) discussed the issue at MIT and several other locations. Their conclusion at the time was that "money matters." This did not mean that deficit spending did not matter, as the Republican Congress that just ended has clearly demonstrated. However, monetary policy is important.

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