However, if interest rates do 8 not decline this channel is not activated. Finally, the proxy role for money could include the effect of monetization on expectations. This channel depends on the ability of policymakers to alter expectations about the course and effects of future policy.
That is, the policy effect does not derive from a higher money supply today but from a perceived commitment to a higher money stock in the future. Expectation effects could alter current long-term real interest rates in two ways.