With regard to the Lipsey-Ahiakpor exchange, Richard, I believe, is making the logically (or mathematically) correct point that, with unemployment, an exogenous increase in the quantity of money which causes a subsequent increase in aggregate demand need not cause an increase in prices. It depends on whether there are idle resources. James, I think, makes one crucial point about aggregate demand -- that it might result from something besides an increase in money. (Supply creates its own demand?) At least other point needs to be made. It is that the idle resources might also be the result of some factor that mitigates the causal sequence that Richard describes. Perhaps we should be reminded of the final lesson of the Phillips Curve episode in the history of thought. It is that the psychological factors that make a government policy appear desirable on the basis of statistical analysis may change. More specifically, the entrepreneurial errors made by workers (the money illusion) got corrected and a strategy that worked for a time to achieve its objectives became not only ineffective but detrimental. You can fool some of the people some of the time... http://en.wikipedia.org/wiki/Phillips_Curve Pat Gunning