The basic error underlying the Quantity Theory of Money (QTM) is the notion that central banks can command their newly created money to flow to the commodity market, or any other market of their choice. This is the pipe-dream of the Sorcerer's Apprentice. In reality, once the newly created money is off the premises it is no longer under central bank control. It has become a plaything in the hands of speculators. Far from being guided by the wishful thinking of central bankers, speculators follow their own agenda. They are motivated by profit potential as they see it emerge in various markets. It is true that, on occasion, the commodity market is their preferred playground and mischief to prices is the result. But it could just as well be the stock, bond, or real estate market. It is also true that there is a "trickle-down " effect on the commodity market as the newly created money is spent again and again by subsequent recipients who are not speculators. But by the time money trickles down to the commodity market damage has already been done elsewhere. Whether peddled under the name "monetarism " or "neoclassical economics", the QTM is utterly inapplicable to the modern economy and cannot explain changes in the price level. The linear relationship between the stock of money and the level of commodity prices that may have held in more primitive societies up to medieval times has been replaced by a highly nonlinea
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