“There is one other aspect of the quantity theory of money that is important to understand. This theory is concerned with the impact that a change in the quantity of money (M) has on the price level (P ). It does not preclude the possibility, however, that other factors in addition to the quantity of money can also affect prices.
It will be essential to keep this in mind when considering the implications of the quantity theory of credit because there has been one development other than the extraordinary proliferation of credit that has had a truly extraordinary impact on prices during recent decades, globalization.
Globalization has resulted in a 95 percent decline in the marginal cost of labor in a relatively short span of time.
…had the price of labor not collapsed, the world would have been beset by hyperinflation long ago.
As the 1980s progressed, however, monetarism lost credibility as it become clear that monetary targeting did not always deliver the expected results. The price level did not change in exact accordance with the quantity of money as the theory held it must. In particular, the velocity of money (V) proved to be erratic and unpredictable.”
–Richard Duncan, The New Depression