Tuesday , November 5 2024
Home / Mike Norman Economics / Primer: Quantity Theory Of Money — Brian Romanchuk

Primer: Quantity Theory Of Money — Brian Romanchuk

Summary:
Note: This is an unedited excerpt from my inflation primer manuscript.Even if we put aside the atypical argument that an increase in the money supply is how to define inflation, there is a widespread belief that increasing the money supply causes inflation (as normally defined). These beliefs can be traced back to what is termed the Quantity Theory of Money, which has a long history in economic thinking.I am extremely allergic to the Quantity Theory of Money. That said, my plan within this book is to stay away from theoretical controversies, and so will attempt to offer as neutral as possible description without inflicting too much pain on myself.Although I refer to this as The Quantity Theory of Money, there are a few variants, with a long history. My impression is that the most

Topics:
Mike Norman considers the following as important:

This could be interesting, too:

Jodi Beggs writes Economists Do It With Models 1970-01-01 00:00:00

John Quiggin writes Monday Message Board

Mike Norman writes 24 per cent annual interest on time deposits: St Petersburg Travel Notes, installment three — Gilbert Doctorow

Lars Pålsson Syll writes Daniel Waldenströms rappakalja om ojämlikheten

Note: This is an unedited excerpt from my inflation primer manuscript.

Even if we put aside the atypical argument that an increase in the money supply is how to define inflation, there is a widespread belief that increasing the money supply causes inflation (as normally defined). These beliefs can be traced back to what is termed the Quantity Theory of Money, which has a long history in economic thinking.

I am extremely allergic to the Quantity Theory of Money. That said, my plan within this book is to stay away from theoretical controversies, and so will attempt to offer as neutral as possible description without inflicting too much pain on myself.

Although I refer to this as The Quantity Theory of Money, there are a few variants, with a long history. My impression is that the most reputable version of the theory is the “equation of exchange” variant. As I discuss below, this variant is not obviously wrong, rather it has the problem that it says very little in practice. As for the other variants, I mainly see various phrasings in popular discussion that have obvious defects, which are not tied to modern economic theory (at best, some garbled version of some dubious assertions made in mainstream Economics 101 textbooks).
Bond Economics
Primer: Quantity Theory Of Money
Brian Romanchuk
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

Leave a Reply

Your email address will not be published. Required fields are marked *