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I think there are some relevant links here related to Caplan, and perhaps other useful links…you will need to page down to the “answer” section…
Caleb,
Advocating expansionary monetary policy in response to an excess demand for money is not the same thing as advocating bank bailouts. By maintaining an environment of monetary equilibrium, some businesses may survive that otherwise would have failed. However, genuine malinvestments, and banks that continue to be insolvent or illiquid, should not be preserved by government action. If you do not understand why these two cases are different, then you probably do not understand half of what me and Horwitz are writing about in that post you linked.
Except that you can’t advocate such an expansion without also advocating for the Fed to increase the banks reserves by creating new money. That’s a free gift in my book.
That this “policy” is reduced down to a simple monetary aggregate rule; keep MV constant, doesn’t strike you in any way as odd? It seems that you found one commodity (and what a commodity it is) that doesn’t suffer from the knowledge problem.
I’m eternally puzzled why a rise in the demand for purchasing power on behalf of market participants can best be satisfied by interventionist policy of redistributing purchasing power and diminishing it… rather than by the voluntary market process that would result in increasing the purchasing power of units of the money commodity…