… is from page 185 of Gerald P. O’Driscoll’s and Sudha R. Shenoy’s insightful 1974 essay, “Inflation, Recession, and Stagflation,” which is Chapter 7 in The Foundations of Modern Austrian Economics (Edwin G. Dolan, ed., 1976):
The two major analytical approaches to the problem [of explaining the simultaneous occurrence, as in the 1970s, of high inflation and high unemployment], that of the Keynesians and that of the monetarists, have a serious failing in common: they ignore the real side of the economy and hence the real maladjustments brought about by a monetary policy that interferes with the coordination of economic activities. Both views implicitly assume that the real side of the economy is always in some sort of long-term equilibrium, in which money influences only the price level or money income and not the structure of relative prices or the composition of real output…. [S]uch a point of view belongs to a stage in the history of economic thought before the structure of output and the influence of prices on production had been worked out.
