Quantity Theory Of Money

A short review I wrote at Imperial College discussing Liquidity Preference Theory and Quantity Theory of Money, dated 16 December 2020. — Note: This review was written in conjuction with Adam Wood, Amalie Kjaer, Bastian Shi, Henry Jones and Tom O’Brien. The Quantity Theory of Money (QTM) proposes the following equation: While QTM has been proven to accurately fit certain time-series data sets [1], this essay argues that the model is oversimplified…

Money is traditionally defined as anything which is generally accepted as a means of payment and used to denote the value of the goods and services produced within an economy. It may occur in any form — commodities (such as gold or silver), livestock, or fiat money (by government decree)…

It is certainly possible to live in modern society without money at all, but it does require some commitment (see https://zerocurrency.blogspot.com). For those of us who accept money as part of daily life, a recurring question is what does one nominal unit of currency (be it dollar, euro, peso, rupee…

The argument for the Quantity Theory of Money (QTM) is typically presented in three components: 1. QTM explains inflation in the long run, 2. QTM explains rapid hyperinflation, and 3. QTM implies that increases in the amount of money raise inflation over the medium term. …

The argument for the Quantity Theory of Money (QTM) is typically presented in three components: 1. QTM explains inflation in the long run, 2. QTM explains rapid hyperinflation, and 3. QTM implies that increases in the amount of money raise inflation over the medium term. …

What about the velocity of money? Despite massive amounts of money pumping into the economy, inflation has basically remained flat. When economists or the media refer to inflation they usually mean an increase (or lack thereof) in the Consumer Price Index. As the reasoning goes, if a larger amount of…

It has come to my attention that many people in the crypto community use the Quantity Theory of Money’ to justify valuations of utility tokens, despite the fact that the “theory” is discredited by most professional economists as arrant nonsense. I thought that it would be useful to provide a…