Money and Output: Correlation or Causality?

At the center of monetary economics is a puzzling observation: innovations (unexpected surges) in the nation's total supply of money are historically correlated with innovations in real out-put Standard monetary economics can easily explain why an increase in the number of dollars will increase the prices of goods and thus nominal out-put, the dollar value of the economy's production. But why should the numher of nearly ficti-tious items called dollars be linked to the amount of real goods produced by workers and machines? Can dollars make workers more intelligent or reduce the breakdown of machinery? The question is of interest to policymakers as well as academics The Federal Reserve System