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Title: MV=QP use in crypto Post by: User365 on March 13, 2018, 11:23:31 AM Very good but long read.
https://medium.com/@brian.koralewski/mv-p-que-love-and-circularity-in-the-time-of-crypto-2b84074fa2d2 Title: Re: MV=QP use in crypto Post by: odolvlobo on March 13, 2018, 12:18:43 PM There is a lot of information there, but I disagree with much of it.
1. MV=PQ is an equation of 4 variables, and that makes it very complex and difficult to determine anything concrete. There are six ways of writing MV=PQ as an equation of two variables keeping the other two constant. You can come up will all sorts of misconceptions by picking some and ignoring the others. 2. MV=PQ is not a causal relationship. The author claims that PQ can only increase by increasing MV, ignoring that MV can only increase by increasing PQ. 3. MV=PQ does not account for changes in the value of the money supply. That is, if MV is fixed, then the value of PQ can still change -- a $100 phone today is much better than a $100 phone was 10 years ago. 4. The author shows how another paper misuses MV=PQ in order to convince the reader that his own use of MV=PQ is valid. It's a logical fallacy -- his is invalid, therefore mine must be valid. The reality is that both are invalid. |