Ask an economist, I am not one.
I will tell you, that trivial identity is not useful for economists. Austrians have a real quantity theory of money, developed by considering individuals decisions over their respective cash-holdings…
Because it describes the relationships between various key macroeconomic variables affecting the price level. It has no explanation of causation, only theory can determine that. I don’t think it can be used to make quantative predictions, nonetheless, it does serve as an analytical tool for explaning the roles played by the factors in question on the price level.
Uh oh. Now you changed your tune eh ? So the product of P and Q is not denominated in $ - it is denominated in $ PER TIME. So now both sides must be denominated in [$/time].
But let’s go along with your previous version.
You have M[$] x [factor] = PQ[$]
Now you are also saying that the equation is valid for a given period. WHAT period is that ?
Time information CAN’T be part of the equation since no time units are used in the equation.
Do you understand that you are both trying to say that the equation is TIMELESS but at the same time is valid for a GIVEN period of time ?
There is no time dimension in either term.
The equation is valid in any given period of time.
And?
It is not. It’s not valid in ‘any’ period of time. It’s not valid in a second, or an hour, or a day (actually it’s never valid). And when you SPECIFY a period of time then the units change. Is that so hard to grasp ? Or are you playing dumb ?
Maybe you should take a look at this ? I mean, if you want mainstream nonsense documented, this is a good source :
No, the subject of analysis is a given time period. It has nothing to do with dimensions.
Clearly a lost cause for you.
P and Q as vectors do not occupy the same vector space. Interpreting PQ as a dot product is nonsensical. The operation is nothing but a summation of expenditures in the economy. It would make more mathematical sense and clarity to just specify it with ∑PiQi (as it is often stated). But P cannot be the price level as it is often stated but simply an array of prices. V is still meaningless since it cannot be properly defined or measured. But then this leaves you with nothing. There is nothing in this equation that can provide insight into some economic theory.
Whatever.
V=PQ/M by definition.
This thread is never going to end.
I=V/R
You ask what is R?
R=V/I by definition!
and
V=IR by definition
There, I defined all variables! by definition!
This is all nonesense! Each variable must be defined independet of the other variables. You can’t just define each variable in terms of the other.
Nonsense. Every concept is defined by pre-existing concepts.
You don’t have any pre-existing concepts for V. All you did is change the equation so that V is on the left side and the remaining terms on the right. All you did is algebra. It is meaningless. You must define V independent of the other terms.
For example: M=total money supply. It is the sum of all money units. I don’t need M=PQ/V to define it. It exists independently from the other terms.
Any mathematical equation that has a physical meaning in the natural world, must have terms that can be physically defined independently.
Define acceleration independetly! Don’t bring in time , position, velocity.
V is simply 1/Money Demand, it’s not a difficult concept. Especially since money demand should be something familiar to Austrian “economists”.
A = B + C + D
Now tell me, what does A represent? And don’t tell me “B + C + D”, because that is meaningless.
‘Velocity of money’ is more precisely a frequency - a number of events in a given period - in this case, how many times an amount of money changes hands.
The unit of velocity of money is 1/[time].
So you have M[$]xV[1/time]=PxQ[$] i.e. the units are wrong.
To recap MV=PQ is a prime example of an attempt to use pseudo-physics in order to ‘model’ something that can’t be modeled…and the units are wrong, at least in your version of the equation. A look at wikipedia seems to suggest that different ‘scientists’ believe that the equation means different things. Which is fine, I suppose, since economic ‘science’ is just subjective opinions, like all philosophy.
You do understand that money, by definition, cannot be used as a common denominator, since its value arbitrarily changes every single day for every single unit.. This is like the biggest objection Austrians have against mainstream neo-classical economists, namely that they use money as the common denominator for capital. Even the “Neo-Ricardians” (Marxists) understand that this is a theoretical nightmare. Don’t listen to Giles, he’s not an Austrian, he just thinks he is (maybe). Giles knows that Mises objected to the pure mechanical approach to quantity theory, as I’ve showed him, numerous times already (both TMC and HA where he completely obliterates it). This is a concept used by Keynesians and Monetarists to explain the phenomena of price changes without considering the individual.
acceleration = Force / Mass
it can be accurately defined and tested.
Define force and Mass!
Do you know what ‘fundamental units’ are ?