The economic "debate" of this election gives you the sinking feeling that the candidates haven't been reading the newspapers and haven't heard of Federal Reserve Board Chairman Paul A. Volcker or the money supply. There is an air of political theater to it all because Volker and the Fed, operating through the money supply, will exert more influence on the economy than the next president. And what the candidates ought to be debating is how they can help the Fed arrest inflation without a prolonged bout of high unemployment.

Put simply, the Fed is now grudgingly committed to monetarism. That's the notion that inflation ultimately reflects too much money chasing too few goods; reducing inflation, therefore, requires reducing money growth. The danger is that the process will work so slowly that it won't be given a chance to succeed. Judged realistically, the economy may not be producing more at the end of 1981 than at the end of 1979. With more people entering the labor force, the unemployment rate soon may pass 8 percent and remain there until at least 1982.

If there were any other way of stifling inflation, it would have been tried long ago. The candidates seem to accept this, but they dont want to talk about its unpleasant consequences. Specifically, they don't discuss what other government actions might reduce the economy's inflationary bias. The political problem is that the actions government might take -- minimizing trade protectionism, subsidies and minimum wage increases -- take things away from voters. In an election year, candidates want to emhasize what they're giving.

But the practical result is also political. There is little effort to inform the public of the economy's realistic prospects or to emphasize that inflationary schemes inherently undermine the economy's capacity to create new jobs. Everyone is against inflation, but there is no genuine anti-inflationary constituency to oppose the pet proposals of specific groups. The ultimate absurdity was the Carter administrations's meek bailout of Chrysler Corp. when that company's workers were receiving a three-year wage increase of between 30 percent and 35 percent. Naturally, Chrysler's prices are rising sharply.

All this increasingly shifts the burden of economic policy to the Federal Reserve, which only can slow money growth and let an underutilized and underemployed economy gradually reduce inflation. This is an extended and sad process, as a brief excursion into the arcane arithmetic of money supply economics makes clear.

Start with the simple proposition that only an increase in the money supply can finance both rising prices and expansion of the ecomomy's "real" output. The Fed has indicated that it will reduce the growth of the basic money supply (so-called M1-B, consisting of cash and checking accounts) to between 4 percent and 5.5 percent next year, down from a range of 4.5 percent to 6 percent this year. Assuming price increases of 9 percent, the 5.5 percent growth in money could finance a constant level of output only if velocity -- the turnover in money -- increases 3.5 percent (5.5 plus 3.5 equals 9).

Any further increase in output would require a greater rise in velocity. That's probable. Coming out of a recession, people and firms begin to make deferred purchases and use their cash balances more heavily; velocity isn't likely to increase more than between 6 percent and 7 percent, which means that the "real" growth of the ecomony will only be between 2.5 percent and 3.5 percent -- not enough to offset the probable drop this year. Not surprisingly, two major economic forecasting firms put the average 1981 unemployment rate at 8.7 percent and 8.8 percent.

If you've followed this arithmetic, you realize that the Federal Reserve's money supply commitments limit the effects of any tax cut enacted to spur the economy. If the tax cut is used to try to pump up demand too much, higher government borrowing to cover the deficit will drive up interest rates and choke off demand elsewhere. Indeed, the first slight signs of recovery and a rise in loan demand already have resulted in some interest rate increases.

But the same money supply arithmetic also means that lower inflation allows more "real" growth and job creation. There are limits, of course, to how much the government can influence inflation. Some prices -- foreign oil -- respond primarily to political events and upheavals. The recent drought in the Midwest will increase food prices further as pork and poultry products cut back supplies in response to higher grain prices.

Likewise, wage gains have accelerated this year. Most workers aren't laid off in a recession. To maintain the goodwill and productivity of workers who will be around a long time, firms relate current wage gains to past inflation. And most workers are semipermanent. A recent paper by Stanford University ecomonist Robert Hall indicates that 54 percent of workers in their early thirties have been at their current jobs for three years or longer.

But government isn't powerless. Aside from shunning favors for specific constituencies, it can fashion its tax cut with monetary policy in mind. Specifically, the next tax cut ought to be modest, ought to repeal the 1981 Social Security tax increase (which tends to get built into labor costs and passed along in prices) and ought to concentrate relief on business taxes (which would limit pressure to restore profit margins by raising prices).

This orientation would diminish upward pressures on interest rates, which is good for three reasons: 1) it would concentrate the recovery on the depressed housing and auto industries which are dependent on credit and sensitive to rates; 2) it would tend to hold down inflation both because mortgage interest rates are built into the consumer price index and because shortages of housing and fuel-efficient cars (read: demand for foreign oil) exert independent inflationary pressure; and 3) it would tend to push money out of short-term investments into the stock market, and the economy needs more "risk" capital.

But the candidates are not talking as if monetary policy existed. The Fed can't lower interest rates by pumping up the money supply without risking greater inflation later. The record of the past 20 years is that economic policy is the creature of public moods, aiming to fight either unemployment or inflation -- but not both. If we can't put them together, we will lose both struggles.