K-Percent Rule

The K-Percent Rule is the idea that a country’s central bank should increase the money supply by the same amount as the growth rate of real GDP each year. It's the brainchild of Milton Friedman. See: Monetarism.

If the money supply...the amount of money in the system...increased along with GDP, it would mean that the amount of value per dollar remains constant.

In the U.S., the Federal Reserve does change the money supply depending on GDP—increasing money supply when the economy is slow, and decreasing money supply when growth is fast. That means that the Fed is acting more extreme than a K-percenter would like.