You claimed that, and I quote, “Quantity theory of money - look it up. You are actively confusing monetary increase and price inflation (which is the only kind of inflation because that’s what inflation means)”, and according to QToM, a theory which you seem to hold as fact, increases in monetary supply (monetary inflation) directly result in price inflation (the only inflation according to you).
Therefore you, personally, either hold to be true the idea that monetary inflation and price inflation are the same thing or you are very (veeeery) confused.
I think we both agree that, in the long run, QToM holds true and prices are always reliant on the money supply. But in the short term, this doesn’t hold true because of the “sticky prices/wages” issue.
I don’t know what you’re talking about “with money that doesn’t exist” but I do know that influx on liquidity doesn’t instantly change prices because prices/wages are sticky and reaction time is delayed. Here’s a few reasons why:
1. Government intervention/coercion; Gov’t forced price ceilings and price floors as well as price regulations through subsidies and pay-offs. All sorts of Gov’t intervention alters the natural equilibrium of prices.
2. Convenience; People don’t want to renegotiate their wage every month, week, day, hour or second, which, if monetary supply inflation directly changed price levels, this would have to be true. People prefer stability and they would rather adjust wages annually rather than daily.
3. Realization & Time; When new money is introduced into the system, what drives up prices is that people have extra liquidity, therefore feel like they can spend more and do so which means people end up charging more because there is more available money and a greater willingness to spend it. However, this new found “wealth” isn’t instant because everyone doesn’t get an equal drink from the fountain. There’s a pecking order in how the new money works its way through the economy. First to the big banks then to the big businesses and then, slowly, through the system to smaller companies and employees and so on. Even when people realize they have more money, it takes some time (varying based on each individuals preference) to feel comfortable with their new wealth and to increase their spending habits.
Even if you eliminated a lot of these coercive factors of government involvement and distributed completely equal portions of the new money to each person, you’d still have some stickiness, again, due to some natural factors like convenience and time.
Don’t take this as a anti-Market post, it’s not, but it’s a post based in reality. QToM doesn’t work in the short-term because it ignores two major factors: Government Coercion and Human Behavior. In the long-term view, I agree with QToM in the long-term but your use of it as a supporting argument against MoralAnarchism’s post was wrong.