Author: Roeland Language: text Description: Thoughts on Lost Coins Timestamp: 2013-05-21 20:38:08 +0000
1. Hey, really love your show.
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3. I just want to add this to the "lost coins" discussion.
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5. There is really no way you can see the difference between lost coins and hoarded coins. So the value of coins can only be related to the number of transactions and number of spend coins. If there are a lot of transactions, the value goes down and prices go up. If everybody is hoarding (or a lot of coins are lost), the value goes up and the prices go down.
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7. The Equation of Exchange (http://en.wikipedia.org/wiki/Equation_of_exchange) tells us that
8. M*V = P*Q
9. M being the total ammount of money in circulation
10. V being velocity of money
11. P being the price level of goods and services
12. Q being an index of real expenditures
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14. So when there is a lot of hoarding, V goes down. When a lot of coins are being lost, M goes down. But we don't know the difference and should consider M*V as a single variable. Let's take 'S' for 'Spent Coins)
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16. So P = S/Q
17. So The price level of goods and services will go up is S goes op (and vice versa). Also, if the number of goods and services offered on the market increases (rising Q) the price of those goods and services will go down (and vice versa).
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19. Keep up the good work!
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21. Roeland from Flanders.