The Equation of Exchange Facilitates the Comparison of Competing Schools of Economic Thought

The equation also facilitates the comparison of competing schools of thought. Considering in sequence Keynesianism and Early and Late Monetarism can provide a basis for setting out the distinctive perspective that emerges from the theory of free banking. [The comparison of schools facilitated by the equation of exchange is wholly independent of the unique qualities of Austrian macroeconomics, which features the intertemporal allocation (and possible misallocation) of resources and requires theorizing at a lower level of aggregation.] The case against central banking and in favor of free banking, then, is preceded by some history of thought--possibly more than some may think justified. The comparison of schools of thought is included for two reasons. First, some writers have recently gotten it wrong, presenting monetarist ideas under the Keynesian label. Second, the case for free banking contains arguments that are sufficiently close to Keynes's own that they need to be distinguished explicitly from his.

--Roger W. Garrison, "Central Banking, Free Banking, and Financial Crises," Review of Austrian Economics 9, no. 2 (1996): 110-111.