Friedman, an American economist and Nobel laureate in economics, believes that "inflation is a monetary phenomenon anytime and anywhere". However, the relationship between money supply and inflation in the real economy is not simply expressed by the amount of money.

A lot of data experience shows that there is an obvious positive correlation between money supply and inflation, which is mainly suitable for long-term and not obvious in short-term. Professor Friedman investigated the relationship between money supply (measured by M2) and inflation (measured by GDP contraction factor) during the period of 1867~ 1960 in American history. Note that he examines the relationship between the average growth rates of these two indicators once every ten years, that is, taking every ten years as a data point to examine the relationship between money supply and inflation. The general conclusion is that high money supply leads to high inflation. However, when this survey is used for short-term analysis, especially when observing the monthly data of money supply and inflation, it is difficult for economists to find any regular relationship between them.

The statement that "inflation is a monetary phenomenon" is a general description of the final result from a long-term perspective, regardless of the specific factors in the economy: that is, inflation ultimately comes down to too much money. This is the same reason that floods are caused by too much water, whether the water comes from the Yangtze River, the Yellow River or the rain in the sky. In short, water is the basic condition for flooding. It can also be understood that too much money is the basic condition of inflation. Therefore, inflation and the causes of inflation are both monetary phenomena, which are problems at different levels. This means that in the long run, to curb inflation, we must effectively control the money supply; In the short term, to curb inflation, it is necessary to analyze specific problems.