The Real Money Theory (RMT)
Money volumes and inflation in goods and services
The experience with QE was that towards the end of the 12 years period of implementation, the prices of goods and services began to rise. This was again not caused as a response to money volumes as such, but rather as the price setting response of supply side producers to the impacts of the cumulative speculative price rises in assets which are also used as inputs. This resulted in rises in the prices of goods and services as well as rises in the costs of living of constituents paying directly for such assets. These include all of the assets missing from the QTM identity and in particular the prices and rentals of land, domestic and commercial real estate, commodities, food, fibre and feedstocks.
Systemic or structural inflation
As a result, it is evident that monetary policy in the form of QE ended up creating a systemic or structural inflation initially affecting assets and then goodsand services.
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