The Quantity Theory of Money And What It Omits
Most subscribe the quantity theory of money even if they do not know what it is exactly. This is basically what economists has espoused for decades. Unfortunately, it is completely false.
In this video I go through some of the reason why this theory is invalid. It overlooks one essential premise of monetary circulation and the impacto on prices.
▶️ 3Speak
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Thank you for the video, it's educative. It is the strive for financial freedom that push us into subscribing to quantity theory of money.
Summary:
In this video, the speaker discusses the quantity theory of money, debunking the common belief that money printing leads to price increases. He highlights that this theory has been disproven, especially citing the example of the 1970s recession and inflation. The speaker emphasizes the importance of considering factors such as the velocity of money and capital flow when analyzing economic trends, and criticizes the oversimplification of economic matters by economists.
Detailed Article:
The video starts with the speaker, identified as Taskmaster4450, introducing the topic of the quantity theory of money. He challenges the widely held belief that money printing directly translates to price increases, labeling this concept as "total and complete bullshit." The speaker asserts that this theory has been invalidated since the 1970s, pointing out that while there have been instances of price and money expansion correlation, there are more complex factors at play.
Task elaborates on the historical context related to economists like John Maynard Keynes and Milton Friedman, who wrote about this theory in the past. He discusses the significance of the velocity of money in economic equations, emphasizing that the stability of this factor is crucial in determining price movements. Furthermore, he mentions the limitations of historical data spanning only about 100 to 150 years, which hinders the comprehensive analysis of economic theories.
The speaker delves into critical examples to illustrate his points. He references the 1920s, emphasizing that the issue was not the quantity of money but the velocity, which significantly impacted prices. Task also dismantles the notion that gold can prevent inflation, providing historical instances like the California Gold Rush and the inflation periods in Spain as evidence to support his argument.
Moreover, Taskmaster4450 addresses the impact of capital flow and the business cycle on economic phenomena, highlighting the role of human psychology, fear, and greed. He argues that economic matters are often oversimplified by economists, who fail to consider factors like asset price fluctuations and the flow of capital across different sectors and regions.
Towards the end of the video, Taskmaster4450 challenges the conventional focus on money supply metrics like M2, criticizing the oversights and limitations of such approaches. He concludes by urging viewers to look beyond traditional economic metrics and consider the broader complexities of economic dynamics.
In essence, the video provides a comprehensive critique of the quantity theory of money, emphasizing the need for a nuanced understanding of economic factors beyond simplistic monetary theories. Taskmaster4450's analysis underscores the importance of considering variables like velocity of money, capital flow, and human behavior in comprehensively evaluating economic trends and dynamics.
Notice: This is an AI-generated summary based on a transcript of the video. The summarization of the videos in this channel was requested/approved by the channel owner.