During the high inflation cycles of the 1970s, classical monetarism experienced a resurgence led by Milton Friedman. Friedman challenged the active, discretionary fine-tuning favored by Keynesian planners, arguing that erratic shifts in the money supply were a primary driver of macroeconomic volatility.

Friedman proposed replacing discretionary monetary adjustments with a hard, rule-based framework known as the K-Percent Rule:

[Policy Committee Discretion Suspended] ---> [Set Money Supply Growth at Fixed K-Percent] ---> [Align Growth with Long-Term Real GDP Trend]

The K-percent rule requires the central bank to expand the money supply at a fixed, unchanging annual rate (such as 3% to 5%), completely separate from short-term business cycle movements. This steady expansion aligns money growth directly with long-term real GDP growth trends, anchoring pricing systems and preventing human policy errors from driving inflation cycles