where for a given economy, over some period \(t\), and ignoring any short term effects,
- \(M\) is the total supply of money in circulation,
- \(V\) is the average number of times money will be transacted with,
- \(P\) is the price level,
- \(T\) is the real value of all transactions over some period.
When stripped of assumed relationships involving interest rates and endogenous versus exogenous supply’s of money, this formula becomes nearly tautological, but is nevertheless illustrative and useful.
Seigniorage Shares
The seigniorage shares model was built with explicit reference to the Equation of Exchange. It’s author, Robert Sams, stated the system’s basic rule as follows:
[A]t the end of some pre-defined interval of time, if the change in coin price over the interval is \(x\%\), change coin supply by \(x\%\).