The fundamental equations of chapter 10 are in themselves no more than identities, and therefore not intrinsically superior to other identities which have been propounded, connecting monetary factors. Indeed they have a disadvantage in that their elements are not those which it is easiest to determine statistically in the present state of our knowledge. They have, however, two principal advantages.

The first advantage is that which we have already emphasised, namely, that they do lead up to what are generally our real quaesita, namely, the purchasing power of money and the price level of output as a whole, whereas the alternative methods lead up, as we shall see, to various hotchpotch price levels which are of no great interest in themselves; and if we try to argue on from these price levels to the purchasing power of money, then we are faced with statistical difficulties at least as great as those which attend our own equation. Thus when we approach the monetary problem quantitatively, the statistical difficulties which the equations of chapter 10 bring to the surface are really latent in any method which we can adopt. In fact the statistical advantages of the other methods only exist so long as we are content with a price level which is by no means the price level we want.

The main advantage, however, to be claimed for the new fundamental equations is for the purposes of qualitative investigation. For they are, I think, a much more powerful instrument of analysis than their predecessors, when we are considering what kind of monetary and business events will produce what kind of consequences.