Chapter VIII: The "equation of Exchange"

Fisher leading, most consistent, most uncompromising
quantity theorist: wide acceptance of his views 154

Taussig _vs._ Fisher 155

Fisher and dodo-bone doctrine: logical part of quantity
theory; Fisher's value concept 155-156

"Equation of exchange": analysis of Fisher's version,
typical of all 156-171

In what sense equality between two sides of equation?
Meaning of "T" 158-161

No "goods side" to equation; both sides sums of money;
equal because identical; equation meaningless 161-162

All factors in equation highly abstract 162-163

"P" and "T" cannot both be given independent definitions:
P defined as _weighted_ average, with T in denominator;
and must be changed from year to year, as elements in T
change, even though no prices change 164-166

This makes circular theory: _problem_ defined in terms of
_explanation_ 165-166

Causal theory associated with equation of exchange 166

Equation amplified to include credit; not acceptable to
Nicholson or Walker, and caricature of conditions in
Germany and France 166-170

Book-credit, bills of exchange, etc., excluded 167-170

Why a one-year period? 170-171

CHAPTER IX

THE VOLUME OF MONEY AND THE VOLUME OF CREDIT

Mill thought credit acts on prices like money, and that
this reduces quantity theory tendency to indeterminate
degree; Fisher holds volume of money _in circulation_
governs volume of credit, so that quantity theory stands 172

Fisher's arguments for fixed ratio, _money_ to
bank-deposits 172-173

Argument a _non-sequitur_, even if contentions true 173-177

Contentions untrue: no fixed ratio between _reserves_ and
deposits, or reserves and demand liabilities, either in
America or Europe 177-182

Taussig's views; virtually surrender of quantity theory in
modern conditions 182-185

Bulk of quantity theorists in between Fisher and Taussig,
but nearer to Fisher's view than to Taussig's 185

CHAPTER X

"NORMAL" VS. "TRANSITIONAL" TENDENCIES

Quantity theory qualified by distinction between "normal" and
"transitional" effects of change in quantity of money, etc. 186

Meaning of distinction, and extent of qualification hard
to determine: is "normal period" real period in time?
How long is "transitional period"? Is it realistic, or
hypothetical? Is equation of exchange realistic?
Concrete _vs._ hypothetical price-levels 186-189

Legitimate and illegitimate abstraction 189-190

Causation and temporal order 190-191

Fisher admits very slight qualification of "normal theory" 192

Mill's quantity theory "short run" theory; Taussig's "long
run" theory; radically different logic in the two 192-193

Fisher's theory sometimes "long run" and sometimes "short
run" 194-195

CHAPTER XI

BARTER

Quantity theory spoiled if resort to barter possible and
important 196

Extent of barter and other flexible substitutes for money and
bank-credit; simple barter; different methods of corporate
consolidations; flexibility, with state of money-market;
clearing-house arrangements in speculative exchanges;
offsetting book-credits 197-200

Barter made easier under money economy, by measure of
value function of money 201

Bills of exchange; foreign trade 201

CHAPTER XII

VELOCITY OF CIRCULATION

Velocity conceived by quantity theory as causal entity,
independent of quantity of money and prices; necessary
assumption for law of proportionality 203

"Coin-transfer" _vs._ "person-turnover" concepts 203-204

Velocity really non-essential by-product, meaningless
average 204-205

Doctrine that velocity independent of money; habit and
convenience; hoarding; hoarding by banks 205-209

Velocity and volume of trade; vary together 209-214

Value of money causally governs velocity 214-215