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This is debatable. The end of our monetary path is probably not great. But with every major currency doing some form of QE, the ultimate outcome is uncertain. T
by christophilus 6y ago
This is debatable. The end of our monetary path is probably not great. But with every major currency doing some form of QE, the ultimate outcome is uncertain. The current velocity of money seems to point to deflation in the near term. If inflation picks up, the Fed has a number of tools at their disposal. I distrust anyone who speaks confidently of the future in this arena.
- panarky 6y agoExactly right. Macro economics 101 provides the identity MV = PQ where M is the money supply, V is the velocity of money, P is the price level, and Q is national output. So it's true that if you hold V and Q constant, then an increase in M will lead directly to increasing prices. But in the chart linked below, you can see that the V fell off a cliff at the same time M increased. https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V Looks more deflationary than inflationary to me.