Replying @dandolfa @farmerrf . I misinterpreted that FTPL was the underlying reason for your statement that in the long term inflation is always fiscal. The Sargent-Wallace paper implies that but only under some other assumptions..1/ https://twitter.com/dandolfa/status/1266759792338579459

“The purpose of this paper is to argue that, even in an economy that satisfies monetarist assumptions, if monetary policy is interpreted as open market operations..”&“.. the monetary base is closely connected to the price level”. But in the last20 years that’s not what we saw /2

So, in my interpretation, the Sargent-Wallace paper doesn’t imply that necessarily in the long term inflation is always of fiscal responsibility. Naturally, if we assume that fiscal dominance always will prevail... /3

Another point is that the last 20 years should also lead us to question that “inflation is always and everywhere a monetary phenomenon”. True, in all hyper-inflation cases there is strong co-movement of some concept of money and inflation, but.. /4

..as Svensson (and Tobin before him) said “co-movement doesn’t mean causality” (Besides, avanced economies are not Zimbabwe). An additional problem is that empirically M is difficult to identify when there are so many quasi-money liquidity sources. /5

And definitely, there is not a monetary base theory of inflation, always and everywhere true. The Radcliffe report in 1959 already drew atenttion to a concept of “general liquidity”, which nowadays, with the explosion of private inside liquidity, became much more relevant 6/end