Dr. Stephen Kinsella:

It is the case that we have a generation of monetary policy makers who believe in something called the quantity theory of money. That basically says the price level is related to the amount of money in the system and that is somehow related to the amount of GDP growth one will see. They believe that holds true in the short term, medium term and long term. I probably believe the long term, where that is 20 years, but I do not believe the short term at all. I do not think the mechanisms are there. To return to the question, the mechanisms have not been correctly identified and until they have, there is no point in talking about them. That is an article of faith, that Europe’s policy makers have but I do not think it is justified by the evidence.