MV=PQ Where, M=money supply V=times money changes hands in one-year P=price level Q=GDP The assumptions for this model are often missed,

MV=PQ Where, M=money supply V=times money changes hands in one-year P=price level Q=GDP The assumptions for this model are often missed, and include: 1.No excess reserves 2.No international leakages, ie.,no carry trade. These two assumptions are unlikely to be true in these times. Current excess reserves are nearly $1.9 Trillion Excess Reserves Source (FRED): http://research.stlouisfed.org/fred2/series/EXCRESNS http://research.stlouisfed.org/fred2/series/EXCRESNS