Non-sense and In-sensibility of the “Cambridge Quantity equation”
Amazingly outlandish is the equation proposed by J. R. Hicks in his 1937 article titled “ Mr. Keynes and …” He is pointblank that J. M. Keynes was by profession neither a researcher nor an economist. No wonder there was in the particular room of 1940s in the U.S., there was only one non- Keynesian who happened to be a Commentator named J. M. Keynes. Now let us put Professor Hicks’ equation on the table: M d = k ∙ P ∙ Y . where M d represents “liquidity preference” aka “ money demand ,” k a constant and P ∙ Y the “ nominal GDP .” Keynesian or not, the equation is a great counterexample of “Sense and Sensibility.” Nonsense No. 1. Misnomer . Money is anything but to be demanded. There is neither a reason nor a way for the household to “demand” money. None would like to “buy” money with money as the medium of exchange in all trade above ground. If ever, it would be extremely uneconomic for any house...