Velocity Wanted: Inflation before Stability
We have the monetary inventory equation owing to William Baumol : M d = ( b ∙ T / 2 i ) 1/2 . T , for the aggregate monetary expenditures per annum , includes spending for GDP ( P ∙ Y ), intermediate goods, production factors, physical assets, human educations, financial instruments and the like. Monetary Transmission Mechanism . The essence of fiscal policy or monetary policy is supplying “incremental money” ( Δ M ) to the private sector. On the other hand, we are very much well aware that the raison d'être of money is in spending. As all of us try to get rid of the annoying thing, additional due to monetary policy, as soon as possible, some combination of the following will happen without fail: 1) More products ( ΔC ) and fresh assets ( ΔI ) are created, and an increase in GDP ( ΔY ) follows. 2) Prices of some products are raised. The...