1752, the British philosopher D. Hume put forward the so-called "price-cash flow mechanism" in On Politics, and expounded that under the international gold standard, the balance of payments of various countries has the function of spontaneous adjustment. In the 1940s, E.M. Bernstein and others believed that there was a close relationship between a country's credit expansion, money supply and the balance of payments, and that credit expansion in different countries would lead to corresponding changes in the balance of payments, but the argument was not systematic. In 1950s, after J.E. Meade put forward the monetary analysis method systematically for the first time, many economists made further research. Monetary analysis is divided into two schools in form. One school is based on the International Monetary Fund, represented by J.J. Pollack, a Danish economist and former director of the research department of the organization. The model established by this school can be used for macroeconomic management, especially when only the most basic information about monetary statistics can be obtained. This monetary analysis method is widely used in the operation of the International Monetary Fund to its member countries. The other school was developed in the 1960s at the University of Chicago under the leadership of R.A. Mundell and H.G. Johnson. This school followed some modern monetarism theories of Friedman, but they denied any connection with domestic monetarism led by Friedman. Monetary analysis was very popular in the middle and late 1970s, and it is still an important theory to analyze the balance of payments. The advantage of monetary analysis is to simplify the complex macro-general equilibrium problem into a seemingly micro-local equilibrium problem similar to an individual. Its disadvantage is that laymen are confused because they can't see the whole picture of the problem.