Mr. Murphy today.
FT.com / Companies / Financials – Danger of persistent deflation is seen as low – I agree on one condition: which is that we print a lot of money
That will permit quantative easing
Of course, it\’s quantitative easing, not quantative. But it\’s a straight monetarist argument.
MV equals PQ of course and if V is falling (as it is, obviously) then in order to keep either or both P or Q stable then we need to increase M. And there are a number of ways of increasing M, from things like changing reserve requirements to increase M4, interest rates for M3 (umm, I\’ll admit to being more than a tad hazy at this level of discussion of monetary economics. Please do correct me in the comments) to simply printing the stuff to increase M0.
Who knew, our Ritchie, a follower of Uncle Milt?