Quote from: macsga on January 31, 2015, 11:21:07 PM

Quote from: oda.krell on January 31, 2015, 11:03:45 PM

Quote from: Erdogan on January 31, 2015, 06:45:44 PM

Quote from: oda.krell on January 31, 2015, 06:17:24 PM

http://en.wikipedia.org/wiki/Velocity_of_money

It is not compatible. I don't give a shit about that article, or the concept of velocity of money. I have written about that numerous times. Although it can be computed, giving a number, the parameter says exactly nothing of the value of money.

I don't get. At least at its core, this isn't some economical conjecture, this is just what you can or cannot do given a set of constraints on your medium of exchange.

If we agree on a medium that consists of a total of 10 tokens, we know that we'll buy and sell goods worth $100 each day, each transfer causes the tokens used in that transfer to be out of circulation for one day, then there is no way around an associated valuation per token of at least $10, or one of the other constraints has to give in (more tokens, less value transferred, less time before token is back in circulation).

At least to my understanding, velocity of money is essentially a formalization of the intuition behind the trivial example I just gave.

But feel free to correct my lack of understanding on this matter. It's possible that I'm missing something very fundamental here.

The velocity of money is meant to be a parameter of interaction with the so called "Laffer Curve", which in essence is a way to calculate the taxation within a country. I must agree with Erdogan here that (at least for now) velocity of money is incompatible with bitcoin.

FIY: http://www.joshuakennon.com/the-laffer-curve-for-beginners/

I see your point about the perhaps more economically interesting use of the expression, but what I have in mind is

Quote

Alternatively and less frequently, it can refer to the transactions velocity of money, which is the frequency with which the average unit of currency is used in any kind of transaction in which it changes possessionnot only the purchase of newly produced goods, but also the purchase of financial assets and other items.

I'd think it's pretty uncontroversial that in that sense, total value of transactions + total units + frequency with which units change possession determines the value of the fourth variable: (associated) value per unit.