> So it would seem that the whole operation failed. This surely draws into question the quantity theory of money, one of the basic tenets of monetary economics.

> So it would seem that the whole operation failed. This surely draws into question the quantity theory of money, one of the basic tenets of monetary economics. A decline in the money supply, all things staying the same, is supposed to cause a fall in prices. Here is a glaring case in which it didn't. Anthropologist Christoffer Gregory (backed up by the Swedish central bank and others) posits a companion to the quantity theory of money, which is the quality theory of money. Gregory studied how it is that people come to value the things they do[1] and brings up several clear cases where people don't value money as highly as they should according to domninant theory. Is it possible that this Gutt operation had a negative effect on the perceived quality of Belgian currency, that this decreased demand for it, and thus lowered its value enough to offset the effect of the reduction in supply? Seems sensical to me that if people worry about the government cutting their notes in half they will request more notes in exchange for another commodity than if they had more faith in the currency. [1]: https://entropicthoughts.com/book-review-savage-money https://entropicthoughts.com/book-review-savage-money