Post
Topic
Board Bitcoin Discussion
Re: Oh please, Bitcoin is NOT deflationary.
by
Imahara
on 30/11/2013, 19:11:29 UTC
deisik:  I feel your pain, debating these Troglodytes.

That said I think the Quantity Theory of Money could be of assistance.  It is a simple and ancient formula that every economic school aknowleges.

The Formula is M * V = P * Q

M is Money Supply
V is Velocity, the number of times each money unit is transacted in the defined time period
P is the Price level of Goods and Services
Q is the Quantity of Goods and Services exchanged during the defined time period

All you are showing is the limits of the Fisher equation of exchange. The equation is a tautology, causing more damage than good in understanding money.

When I am saying people will hold on to their money now and spend it later, that can be interpreted as lowering the velocity now, and increasing it later. Then you will understand that that is consistent with a stable price level and an increasing quantity of goods.