Michael Nuwer asks, "Which long run are *you* thinking about: the one 
where 'time is the essence of the matter' or the one where 'everyone 
correctly foresees the situation'?"

As I believe all economists are supposed to know, the long run in 
economic analysis is the period within which there are not fixed 
factors.  Thus, in monetary analysis, it is the period in which 
interest, wage, and rental contracts are no longer binding and economic 
actors can respond fully to a change in the quantity of money (and 
prices).  This would be a reaction to a past event.  "Correctly 
foresee[ing] the future or situation" would not be in my vocabulary of 
the long run.  Individuals may form expectations about the future, but 
they need not be correct.

Michael also asks, "Which long run do you think Keynes ascribes to the 
Quantity Theory?"  This properly is the relevant question, not what *I* 
think the long run is.  It should be answered with reference to Keynes's 
(1923) own discussion.

Keynes was discussing the Quantity Theory's proposition that (given the 
demand for money) changes in the quantity of money (currency) would 
ultimately be reflected proportionally in changes in the price level, 
e.g., Hume (1752).  This is what Keynes restates as, "So long as k 
remains unchanged, n and p rise and fall together; that is to say, the 
greater or the fewer the number of currency notes [n], the higher or the 
lower is the price level [p] in the same proportion" ([1923] 1932, 77), 
and he subsequently also refers to Marshall's (1923) restatement of the 
classical proposition (pp. 78-9).  It is also to this proportionality 
proposition that Keynes refers when he write: "It would follow from this 
that an arbitrary doubling of n,  ..., must have the effect of raising p 
to double what it would have been otherwise.  ... Now 'in the long run' 
this is probably true."

But, according to the classics, in the interval of the change in the 
quantity of money and the proportional response of prices, real output 
and employment do change, as Hume explicitly states: "though the high 
price of commodities be a necessary consequence of the encrease of gold 
and silver, yet it follows not immediately upon that encrease; but some 
time is required before the money circulates through the whole state, 
and makes its effect be felt on all ranks of people."  Hume also 
summarizes the proposition thus: "alterations in the quantity of money, 
either on the one side or the other, are not immediately attended with 
proportionable alterations in the price of commodities.  There is always 
an interval before matters be adjusted to their new situation; and this 
interval is pernicious to industry, when gold and silver are 
diminishing, as it is advantageous when these metals are increasing."

One also has to keep in mind that the quantity theory allows for changes 
in the demand for money itself to affect the price level.  In other 
words, k (inverse of velocity) is not a fixed constant.  It depends on 
the availability of credit, the level of interest rates, and 
expectations of all sorts -- financial market conditions, political 
events, rates of inflation, etc.  Thus, a shaken confidence in banking 
institutions would cause an increase in k.  And when the price level 
changes from a change in k, output and employment would change because 
of the existence of contracts.  The responsibility of the monetary 
authorities at that time is to increase the currency, if they can, or 
act quickly to restore confidence.  Hume, Ricardo, Mill, and Marshall 
explain this policy action.

The classical theorists and their consistent 20th century followers, 
particularly, Marshall and Irving Fisher (1912, 1913), knew and argued 
the above before Keynes wrote in 1923.  Thus Nuwer's appears to be 
setting up a straw man for easy refutation when he writes: "It seems to 
me that the '_this_ long run' identified as a misleading guide is the 
one where everyone correctly foresees the situation: the long run where 
'the ocean is flat again.'"  And I can hardly make good meaning of what 
he says by "However, in the long run where time is the essence of the 
matter, changes in the money stock is likely to have an influence both 
on the velocity of money and on the real volume of transactions."

The classical proposition is that real variables (output, employment, 
real wage rates, real interest rates, real rental rates) would be 
unchanged in the long run, though they would be in the short run, from a 
change in the quantity of money, relative to its demand, or a change in 
money's demand, relative to its supply.  And the long run does not take 
a generation to arrive.  That's why more people would be alive in the 
(monetary) long run than would have died.

Thus Nuwer's argument that "Keynes is reminding us that when it takes 
considerable time to reach the full-employment equilibrium described by 
the classical model, our plans may change. Tomorrow does come, but it is 
not the tomorrow anticipated by the classical model," is not an accurate 
criticism of the classical quantity theory of money.

James Ahiakpor