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Iceland
The relationship between money and prices
The quantity theory of money and its accompanying equation of exchange are generally accepted as defining the relationship between money and prices. The equation has been expressed a number of ways, always including “velocity of circulation”, which is a variable essential to balance the equation. Few disagree with the simple ...
When bailouts don’t work
Sometimes bailouts do not achieve what is intended, which is one reason they should be avoided. The people of Iceland apparently have some discerning insight into this basic financial reality. When a financial collapse over three years ago sent their economy into a tailspin, Icelanders were given a chance to vote on whether they should ...
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