Skip to content

Since you ask, P³, no…..

This is so confused. Start with the claim that ‘QE is justified by low inflation and not high deficits.’ Surely, even the most elementary thinking might suggest that maybe low inflation was the result of low demand as a consequence of which high deficits are required to promote economic recovery? In other words, such analysis would note that in the situation we are in (and the FT has contextualised this argument in this way) the claims made here are the same?

Once answer is this:

There’s been a change in the velocity of money.

Another possible answer is that perhaps we’re not actually in a recession where we’ve a shortage of demand. That’s not the only possible reason for a recession of course. Could be we’ve had a shock to hte supply side, something that isn’t solved by an increase in demand.

But, you know, that would require a knowledge of macroeconomics to work through…..

1 thought on “Since you ask, P³, no…..”

  1. There’s certainly been a change in the velocity of cash. My ‘weekly’ withdrawal from the ATM is still in my wallet 10 months later.

Leave a Reply

Your email address will not be published.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