The Big Error of All Quantity Theorists Is to assume That Money Is Only a "Veil" and That Increases in the Quantity of Money Only Have Influence on the Price Level, or on the Purchasing Power of the Money Unit

The big error of all quantity theorists, from the British classicists to Milton Friedman, is to assume that money is only a "veil," and that increases in the quantity of money only have influence on the price level, or on the purchasing power of the money unit. On the contrary, it is one of the notable contributions of "Austrian School" economists and their predecessors, such as the early-eighteenth-century Irish-French economist Richard Cantillon, that, in addition to this quantitative, aggregative effect, an increase in the money supply also changes the distribution of income and wealth. The ripple effect also alters the structure of relative prices, and therefore of the kinds and quantities of goods that will be produced, since the counterfeiters and other early receivers will have different preferences and spending patterns from the late receivers who are "taxed" by the earlier receivers. Furthermore, these changes of income distribution, spending, relative prices, and production will be permanent and will not simply disappear, as the quantity theorists blithely assume, when the effects of the increase in the money supply will have worked themselves out.

--Murray N. Rothbard, The Case Against the Fed (Auburn, AL: Ludwig von Mises Institute, 2007), 25-26.