Many subscribe, wrongly so, to the quantity theory of money. We are in an era that is much different from even the day of Milton Friedman.
In this video we discuss how velocity of money was the missing component from his work. He had the luxury of it not being an issue as he was in a stable periond. Today, we are in a much different environment.
▶️ 3Speak
If we want to inflate the balloon (grow economy), we need to increase average force exerted on its surface = pressure. We can do that by either increasing the amount of air (increasing money supply) or by increasing air's average kinetic energy = temperature (velocity of money). Actually, we could also increase stretchiness of the surface material (loosen regulation?) but we need to be careful not to go too far or risk exceeding its tensile strength. I wonder how far it would be possible to draw that analogy. Maybe laws of thermodynamics apply to economy?