Math is not the strong suite of most people. See below...
I regret entering the earlier immature tit-for-tat debate.
It would be better for me to phrase my view succinctly and unarguably.
Fact:
In the Quantity Theory of Money a constant money supply requires that the economy can grow only if the velocity-of-money circulation rises exponentially or the price level declines exponentially, neither of which are plausible for a healthy economy.
Goldbugs give up. You have no argument.
Fact:
The Quantity Theory of Money is circular logic. It basically says that the velocity of money determines the value of money which determines the velocity. It treats velocity as a
cause of human action, when it actually is the result.
https://mises.org/daily/2916The equation asserts merely that what is paid is equal to what is received. This proposition may require algebraic formulation, but to the present writer it does not seem to require any formulation at all. The contrast between the "money side" and the "goods side" of the equation is a false one. There is no goods side. Both sides of the equation are money sides.
This bears repetition in slightly different words. Increased velocity of circulation is not, in itself, even a contributing cause of higher commodity prices. It is not even a link in the chain of causation. Increased velocity of circulation and higher commodity prices are joint results of a change in the value of money in relation to the value of goods. When people value money less in relation to goods, they offer more money for goods; when they value it more in relation to goods, they offer less money for goods. Any change in velocity of circulation is likely to be a result of these changed value decisions: it is not itself a cause of the change in value. The value of money does not decline because its velocity of circulation has increased, though the velocity of circulation may increase, when it does so, because the value of money in relation to goods has declined.
Okay you have accepted my challenge upthread, wherein I stated the only way you could challenge my argument is to attempt to refute the
Quantity Theory of Money (QTM),
M x V = P x Q.
Above Mises is not arguing that the velocity
V has no mathematical relationship to the
P x Q ≅ nominal GDP. Rather he is arguing that
P x Q ÷ V is the demand for
M.
Thus he is not refuting the QTM, rather he is interpreting it one way. And that is one correct way of characterizing the effects of the QTM. However it is not the only way to interpret the QTM.
What he is essentially saying (which is correct), is that the QTM does not guarantee a cause and effect relationship between
M x V and
P x Q. Rather they just match, but it can't say which variable item in that equation caused the changes in the others.
Duh! That is what the algebraic equation says. It just relates the quantities, it doesn't mathematically say much about cause and effect. It is not like Mises said anything that wasn't already obvious from looking at the QTM equation.
However as I explained upthread, since
nominal GDP increased by 5% per annum in the 1800s, then
P x Q ≅ nominal GDP, so we can conclude that if
P was not rising by 5%, then
Q was rising. And
Q is the quantity of goods and services produced. If
Q is rising faster than the percentage of additional workers per annum, then productivity per capita is rising.
So clearly we can conclude that productivity was rising in the 1800s very fast, because the price level
P was not rising nearly as fast as the
nominal GDP was. And I have claimed that the productivity was rising fast, because
the government was 5 - 10X smaller!
Small government is what leads to prosperity, and fooling yourself about money supply won't help you. The outrageous increases in money supply now, are because the government is huge and has control over the issuance of money and has a huge socialism bill to pay.
There is no way to argue directly from the QTM that
M had anything to do with
P x Q. You could argue that increasing
M while holding
V constant would have increased
P perhaps, yet then
P x Q would have also increased and still
Q would be the factor responsible for increase of the
real GDP, i.e.
nominal GDP minus the increase in
P.
We can conclude that if
P x Q ≅ nominal GDP is rising by 5% per annum, then either
M or
V or some combination must also rise by 5% per annum. So if
M were constant or falling, then
V would have to rise exponentially faster than 5%. And then you re-read my upthread posts on why that is not a normally functioning economy. In short, exponential growth of velocity can not physically continue forever. And the faster it is growing, the faster the economy must overheat and correct.
So we can conclude that those who are argue for benefits of a constant money supply have no mathematical acumen. Mises never argued for that, as I quoted him upthread. And gold never had a constant money supply God wasn't that stupid. Even the
Parable of the Talents explains what burying capital in hole (i.e. money that is never diluted and increases in value from doing nothing) gets you with God (your talents are taken and given to someone who will use them more productively which is what is going to happen to most of you in Bitcoin, e.g. one reason is many of you will not exit before the final peak and crash some 18 - 48 months from now because Bitcoin is not a currency).
Complete nonsense that a constant money supply is good for Bitcoin, other than it perhaps causes "gold fever" which may increase the price faster into a bubble. It is worse for many reasons. One is it enables the
Transactions Withholding Attack. Secondly is eliminates the ability to
distribute the coins widespread throughout the economy via a CPU-only proof-of-work algorithm (which no crypto-currency currently has either), and thus Bitcoin is doomed to the dystopian failure for thus due to lack of widespread distribution it can never
become a currency due to the chicken-and-egg dilemma.
It is up to you. Make your decision and buy the coin you think is better for our future. If all of you are math retards, then so help us God, we are headed for 666 dystopia then.
I have faith that not all of you are stupid and stubborn. And some of you can learn and make a wise decision.
I don't have time to discuss this more. I am busy programming. Leave me alone. Go on with your individual decisions. That is a free market.
I have told you. I can lead a thirsty horse to water, but I can't force it to drink from a blue colored aquifer because it thinks all water is colorless.
