Talk:Equation of exchange

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[edit] Section 1, 2nd paragraph moved to below

In section 1 of the article, the 2nd paragraph was removed from the article:

The equation
M\cdot V_T = P\cdot T
is based upon the presumption of the classical dichotomy — that there is a relatively clean distinction between overall increases or decreases in prices and underlying, “real” economic variables — and that this distinction may be captured in terms of price indices, so that inflationary or deflationary components of \mathbf{p} may be extracted as the multiplier P\,:
M\cdot V_T = P\cdot (\mathbf{p}_{real}^\mathrm{T}\cdot\mathbf{q}) = P\cdot T

The equation is an identity. It is not based on any presumption. It just is. For one already acquainted with the classical dichotomy, the paragraph will not help. For others it seems very unlikely to help. Better to omit something that only gets in the way of a clearer explanation. --Thomasmeeks 00:02, 3 September 2007 (UTC)

No, Thomas.
M\cdot V_T = PT, where “PT” is defined as the nominal value of transactions, is not quite an identity, but it is a tautology. The problem comes in the notion that there is a meaningful P and T such that PT=P\cdot T, so that one may go from
M\cdot V_T = PT
to
M\cdot V_T = P\cdot T
That is a presumption of the classical dichotomy. If a “real” T is not well-defined (and it isn't), then neither is P (and vice versa).
You need to become better familiar with criticism of neoclassical economics from non-neoclassical economics, and to cease your programme of erasures in the mean-time. —SlamDiego←T 15:10, 22 December 2007 (UTC)