Sunday, December 13, 2020

Menzie gets the gold star

MV = PQ?
Tautologically, yes; maybe not so much if V (velocity) is constant.

Can I unravel this?

V is low now, and constant. V, in fact, V is near one, as if we go to the store once per accounting interval.  The measurements are aliased, way too under sampled.  By the time bean counters get one complete set, most of the next period has already been purchased, all at once.

Velocity, arrival rates, adapt unlike Poisson queue with an infinite pool. V, like zero bound, needs wiggle room. The missing transactions are in the shadow economy, home production few trips but buying in large quantities, off book hedge funds, corporate verticialization; all of them skipping out on regulated money.

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