From Cambridge to Eternity: “Flow to Stock to Flow”
A moment is to a period what a dot is to a line. There is no dimension in the moment and in the dot, while one time dimension (T 1 ) in the period and one length dimension (L 1 ) in the line. As the naught (0) does not exist on Earth neither does the moment or the dot; all the three are imaginary and mathematical. Theories are approximations, as Eugene Fama at Chicago Booth once quipped. Let us take the survey period (T -1 ) for the approximate moment (T 0 ). Now, we somehow have the stock (T 0 ) of a certain measure, for instance, the volume of water in the tank. The tank is empty in the beginning. Then the flow comes in at a certain speed, say, F litters per hour . We have 1 ∙ F liter of stock in an hour, 2 ∙ M in 2 hours and n ∙F in n hours. The three R’s tell us that the flow stacks up at the incoming speed of F over n hours...