Friedman Rule

The Friedman Rule is an economic principle suggesting that the central bank should set the nominal interest rate to zero or slightly negative to minimize the costs of holding money. By doing so, it encourages people to hold cash instead of other assets, preventing inflation and promoting efficient use of currency within the economy. Essentially, it aims for an optimal balance where the real value of money is preserved and transaction costs are minimized, leading to stable prices and efficient economic activity.