Talk:Velocity of money
|WikiProject Economics||(Rated Start-class, Mid-importance)|
Mid? and Income velocity of money
Is it of mid-importance? not mega?
The article income velocity of money seems to be talking about the same thing(though I am not that sure). Is so, why not merge indicating the synonimous usage of language? Cosfly (talk) 16:08, 9 July 2008 (UTC)
- Good points.
- However, I recommend not worrying much about importance ratings unless you find someone trying to push an article down by some significant amount. ;-)
- It is unlikely that there will ever be a need for a separate article “Income velocity of money”, that article was much stubbier, and it added nothing to what is here. So I've made it a redirect. —SlamDiego←T 16:23, 9 July 2008 (UTC)
I presume it's supposed to be a joke that in an article on a complex economic subject links are added to such terms as "corn", "tractor" and "barn cat" that have absolutely nothing to do with anything.
- You grossly misunderstand the purpose of wikifications at this site. The point of a link is not to provide some sort of guided study, but to allow the reader who wishes to quickly read about subjects upon which the article has touched. —SlamDiego←T 06:10, 1 March 2009 (UTC)
Excision of misplaced criticism.
I have excised the following criticism from the article:
- Ludwig von Mises argued that the concept of velocity of money is spurious, because it does not reflect the primary consideration that prices depend upon the conditions of the actors, namely, their real wealth and their wants and needs.
In analyzing the equation of exchange one assumes that one of its elements — total supply of money, volume of trade, velocity of circulation — changes, without asking how such changes occur. It is not recognized that changes in these magnitudes do not emerge in the Volkswirtschaft as such, but in the individual actors' conditions, and that it is the interplay of the reactions of these actors that results in alterations of the price structure. The mathematical economists refuse to start from the various individuals' demand for and supply of money. They introduce instead the spurious notion of velocity of circulation fashioned according to the patterns of mechanics.
- Von Mises maintains that money is an economic good whose value, expressed as the amount of other vendible goods and services that it will buy, depends upon supply and demand, just like the value of any other good.
Media of exchange are economic goods. They are scarce; there is a demand for them. There are on the market people who desire to acquire them and are ready to exchange goods and services against them. Media of exchange have value in exchange. People make sacrifices for their acquisition; they pay “prices” for them. The peculiarity of these prices lies merely in the fact that they cannot be expressed in terms of money. In reference to the vendible goods and services we speak of prices or of money prices. In reference to money we speak of its purchasing power with regard to various vendible goods.
For the simple reason that it's misplaced.
Criticizing the concept of the velocity of money is like criticizing the concept of toads. Regardless of whether the velocity of money is important or relevant or whatever, it's observable. As I've said before, in a small economy, one could just follow each friggin' monetary unit around, recording how often it changed hands in transactions, and then average that out. That average would be the velocity of money. (In a bigger, more complex economy, there would be practical difficulties, but the velocity would be no less real.)
A passage from v Mises denying that velocity is important or relevant would belong in the article on the quantity theory of money, or in that on the equation of exchange. It doesn't belong in this article.
Let me also note that
- an em-dash is not two friggin' hyphens,
- one doesn't put quotation marks around a blockquote unless those marks appeared in the quote in the first place,
- the “von” in “von Mises” is not capitalized unless it begins a sentence, and
- the convention for citations in Wikipedia in not just to slap on a bracketed attribution at the end.
- I put in the text that you deleted. I apologize for not knowing all the editing conventions. I am not a frequent contributor to Wikipedia. Your point about the appropriateness in this article is well-taken. If you could put the deleted section in a more appropriate place, I would appreciate it. If that is too great an imposition, I understand. In that case I will attend to it when I have the time. Would it be acceptable to put a link to the new section somewhere in the current article?
- Best regards,
- The next question is whether this criticism should go in “Quantity theory of money” or in “Equation of exchange” or elsewhere. I think that it should go in “Equation of exchange”. I'm willing to effect the transfer (mutatis mutandis), after you and others have had a chance to ponder and comment on whether you agree with moving it to that particular article.
- In either case, this article is already linked to each of them, though it might be that this article should have a “See also” section.
- V. Mises' criticism extended beyond the mind-less treatment of velocity. He was perturbed by the notion of the price level. I seems top me that it would be best to include that criticism (from v. Mises or from Davenport or from whomever) in a criticism section. —SlamDiego←T 20:23, 8 March 2009 (UTC)
- Someone will have to locate his comments first. I'll try to get to it, but it has been many years since I noted that he was amongst those who rejected the notion that one could cleanly distinguish a “real” component within a nominal value, and my own copies of Davenport's books are in storage. We can also note Don Patinkin (a Keynesian) as an economist who famously rejected the classical dichotomy. —SlamDiego←T 07:49, 10 March 2009 (UTC)
The charts do not look correct to me. For example nominal GDP averaged about $525bln in 1960 and M2 averaged about $305 bln making velocity about 1.7. Currently GDP is about $14.2 Tln and M2 is about $8.3 Tln making velocity about 1.7. This doesn't seem to be what the charts are showing. —Nschoewe (talk) 20:27, 2 October 2009 (UTC)
- Do you have a “reliable source” for that? If so, then we'll want to hail Bkwillwm (who used a “reliable source” for those charts and for their interpretation) to discern what has happened. (I don't recall much looking at data for the '50s and '60s, and it has been literally decades since I looked at the data at all. So I have little feel for it.) —SlamDiego←T 21:13, 2 October 2009 (UTC)
- Most of my data came from the Fed's FRED system (http://research.stlouisfed.org/fred2/). I think the only non-Fred data was GDP from the BEA, but FRED has GDP too. I used a spreadsheet to pull the data together and graph it. If there's a mistake, it's possible its in the spreadsheet. I'll check it to see if I can find any errors. At first glance, it looks like I might have switched M1 and M2, but I'll dig deeper. I'm looking at a static version of the sheet. I can't get the active version until next week.--Bkwillwm (talk) 22:05, 2 October 2009 (UTC)
- I fixed the charts and added one for M3 while I was at it. I can email my data if the numbers are still in doubt.--Bkwillwm (talk) 00:41, 6 October 2009 (UTC)
The third chart axis title says M1 instead of M3.
This chart indicates the velocity of M2 has dropped to its lowest level in 2014. It would be great if the charts here could be updated to reflect that as it has economic significance. - Shiftchange (talk) 00:40, 28 May 2014 (UTC)
Erasure from Hong Kong
This anonymous edit from Hong Kong removed reference to the the most influential writing from the Austrian School concerning monetary velocity, with the spurious summary “not directly relevant”. (Based upon the anon's edit history in general, and one edit in particular viewed in the context of another, I'd guess that the edit was effected by Lawrencekhoo.) —SlamDiego←T 16:22, 28 December 2009 (UTC)
Real velocity values/logarithmic scales
I would love to know what are actual typical values for the velocity in the US and maybe other economies. The charts are good but the logarithmic scale (in what log base?) don't show actual numbers. Thanks Zvis (talk) 12:17, 2 June 2011 (UTC)
- Logarithms are typically log base e. Anti-logs of values I obtained from the plots with logarithm scales agree with those from the semi-log plots. Most plot generators (e.g., MS Excel) will produce semi-log plots without the need to mess around with logarithms.Virgil H. Soule (talk) 23:57, 2 October 2012 (UTC)
In physics velocity is measured with respect to time, e.g., meters per second. In the Illustration the Velocity of Money value is given as 2/yr. Everywhere else, Velocity is simply a ratio. Presumably, "aggregate" means that a population of values is summed to obtain nT. If nT is summed over some time span, units of velocity would be 1/time. Is some time span implied or understood for computation of nT? Are time spans consistent for data used to compute nT? Virgil H. Soule (talk) 00:18, 3 October 2012 (UTC)
Probably thinking about physics is the worst idea possible. Velocity is a vector value of speed where this is more of a frequency. Probably should be in units of hertz.188.8.131.52 (talk) 05:50, 19 August 2013 (UTC)
Choice of algebraic variables
The formula is often stated as MV = P (or MV = PY). The use of subscript-n T and such in the "Indirect measurement" section seems needlessly pedantic. — Preceding unsigned comment added by 184.108.40.206 (talk) 02:45, 4 May 2014 (UTC)