Milton Friedman has been dead for two decades, but his ideas just got a second wind. Stephen Miran, the former Federal Reserve Governor who served from September 2025 to January 2026, has co-authored a research paper arguing that the Fed should pay far more attention to money supply data when making policy decisions.

The paper, titled “A return to monetarism?” and published in July 2026, was written alongside economists Peter Ireland and Nouriel Roubini.

What the paper actually says

The core argument is deceptively simple. Monetary aggregates, think M2 money supply and more sophisticated Divisia measures, are better predictors of inflation and economic growth than the Fed has been willing to admit for the past several decades.

The paper stops short of calling for a full return to money-supply targeting, the rigid approach Friedman championed and the Fed briefly tried in the early 1980s under Paul Volcker. Instead, it advocates for monetary aggregates to play a “significant role” in policy decisions alongside existing tools.

The paper’s most pointed claim is retrospective. It argues that monetary aggregates had already signaled an excessive stimulus phase in the post-pandemic era, the period when the Fed kept rates near zero while M2 exploded upward. Had policymakers been watching those signals more closely, the argument goes, they might have tightened sooner and avoided the worst of the inflation surge that followed.

Using updated P-star models, a framework that links money supply to long-run price levels, the authors conclude that current monetary policy appears neutrally aligned with inflation forecasts.

Why the timing matters

Kevin Warsh, the new Fed Chairman, has expressed support for monetarist principles in policy discussions. When a sitting Fed chair is sympathetic to an idea and a well-connected former governor publishes research backing it up, the probability of that idea influencing actual rate decisions goes from theoretical to very real.

Miran’s tenure at the Fed ran from September 2025 to January 2026. The research paper reads less like an academic exercise and more like a policy memo with a wider audience.

The stablecoin connection

In a November 2025 speech, Miran estimated that stablecoins could create a multitrillion-dollar boost for dollar-denominated assets and potentially lower interest rates. The logic is straightforward: stablecoins like USDT and USDC are primarily backed by US Treasuries and cash equivalents. As the stablecoin market grows, so does structural demand for government debt.

If the Fed starts paying closer attention to monetary aggregates, stablecoins become impossible to ignore. They represent a growing pool of dollar-like instruments that exist partially outside the traditional banking system but still affect the broader money supply picture.