I think we're getting into a region of subtlety where we'd have to actually look at data. I have no idea which countries you're referring to specifically, for e

I think we're getting into a region of subtlety where we'd have to actually look at data. I have no idea which countries you're referring to specifically, for example. On the "hot-potato effect", I found this part of the linked article quite funny: > Notice that so far these changes can be fully explained using the basic principles of microeconomics. There is no need to resort to “transmission mechanisms” such as interest rates. Just S&D. Well, how does the author think that the "transmission mechanism" of interest rates is supposed to work? By the basic principles of microeconomics, supply and demand! The price of money is the interest rate. And yes, so far as banks trade financial assets with each other in exchange for reserves, there can be an effect on asset prices. But asset prices are basically an inverse of the interest rate; in particular, when you look at the bond market, long term bond prices are an inverse of long-term interest rates. Indeed, when you look at quantitative easing, it did have the effect of pushing the long-term interest rate even further down, which is equivalent to pushing asset prices up. So yes, the transmission mechanism is the interest rate. The article pretends to disagree with that, but it really doesn't. Instead, it just explains it in more detail, but without being aware of the connection. Of course, there's nothing wrong with explaining things in more detail. There are two points where I believe the article is wrong. The first is a minor point, namely where it says there can be a (direct) effect on output. Since reserves aren't used for transactions in the real economy, that's not possible. The second is quite a bit more important. The article starts its analogy with a scenario where new gold deposits are discovered, i.e. the increase in gold is a purely exogenous event. Base money increases are never purely exogenous events. Of course it might start with a central bank policy decision (although more often than not it starts with a commercial bank decision!), but even in that case, the central bank can only increase the level of base money if it finds a willing commercial bank as a counterparty to a trade. So the "hot-potato effect" is necessarily weaker than in the case of newly found gold deposits. The analogy with gold is not ideal and could be misleading your intuition.