Who's using intuition now? Stagflation in the 70's is a pretty jarring counter-example.
We're living in an interesting economic time where Keynesian policies seem intuitively more effective than Austrian economics. Afterall, the Fed has been printing money like mad for the last 20 years, and there's no worrying inflation to be found.
But there's an argument to be made that prices should be much lower than they are - that the scale of automation and globalization that we've seen has put enormous downward pressure on prices, and the currency devaluing effects of Fed monetary policy have put upwards pressure on prices without resultant inflation.
So we can still afford a loaf of bread without having to push a wheelbarrow full of greenbacks up to the register, but the problem has manifested itself in different ways. Most obviously in the growing wealth gap, where those who are most capable of taking advantage of the Fed's cheap currency (the financial industry) have gotten all of the gains from automation and globalization, while the rest of us are stuck with a devalued currency.
In other words, the way to reconcile stagflation with the text you quoted is, "full capacity" was lower in the 70s, so we had inflation without full employment. And to be fair, the text you quoted should be "full capacity OR full employment."
Quantitative easing is also very different from what you might think, but in a sense, QE was also the ultimate refutation of, at least, the money multiplier view. The Fed injected far more base money than necessary to maintain the prime rate, and what happened? The money multiplier fell. So really the Fed had the story backwards there, or else they were trying to invoke some voodoo magic.
My wording wasn't clear. I meant for price rises to necessarily be the case for any rise in the monetary supply, by the PY = MV identity. Of course inflation is still still possible when the economy is not at full capacity or full employment.
The critical thing to understand these cases - and Weimar - is that you can't print foreign currency.
What happens in those economies is that the balance of trade worsens dramatically, but either people still need imports (oil, pharmaceuticals, spare parts for industry) or in the case of Weimar the country was obliged to export gold by the reparations treaty.
So prices of imports or import-dependant goods rise; the goverment prints money to try to keep up, but since it can't print exports or forex this doesn't work.
(I'm not sure whether your PV=MQ argument is precisely correct or if it overlaps with IS/LM, but it's broadly right)
That is not necessarily true, and in fact is often false. That is called the 'quantity theory of money', and for all its faults even mainstream economics doesn't buy into that anymore... It does appear intuitive - if there is more money in existence then existing money is worth less, right? There's even an identity that 'proves' this, PY = MV. Well, no. For price rises to be the case, the economy must be both at full capacity and full employment. It is also thinking about the problem statically, assuming that the amount of goods and services in the economy does not change to respond to an increase in demand.
In the real world, economies actually have a lot more capacity to absorb extra money than people think (many people are spooked by cases like Zimbabwe and Venezuela, whose problems in reality were caused by completely different factors). And the Austrian mistake of assuming that monetary expansion == price inflation is dangerous, because if implemented the kind of policy leads to effectively controlling inflation by causing unemployment.