IN GEOMETRIC TERMS

that rate, nevertheless that rate is not really completelyfixed independently of his own borrowing or lending.What the market does is to keep the Market line for dif-ferent individuals parallel. There cannot be two rates inthe same market at the same time—at least not in theperfect market here assumed.

But these parallel lines are always swinging a littleback and forth to “clear the market.” Each person’s Mar-ket line may turn slightly about his P as a pivot. AllMarket lines turning together, that is keeping parallel,tend to reach the right inclination—that which clears themarket and brings the center of gravity of the Q’s intocoincidence with that of the P’s.

Thus, the economic problem of determining the rate ofinterest becomes the geometric problem of experimentallyoscillating all the M lines until their common inclinationbrings the center of gravity of the contacts (Q’s) intocoincidence with the center of gravity of the P’s.

We now have the complete geometric representation ofthe whole problem of the rate of interest under the as-sumptions of the first approximation—complete exceptthat, to put the picture on a two-dimensional chart, wehave had to add the restriction that “other things areequal” as to all years beyond the first and second . 8

Thus the economic problem of determining the rate ofinterest is translated into the geometric problem of draw-ing a series of parallel straight lines through given points,P’s, at such a slope as will make the center of gravity ofthe Q’s coincide with the center of gravity of the P’s.There is a one-to-one correspondence between the eco-nomic and the geometric problem, so that if the “map”

“ A more complete expression, in mathematical terms, applying to anynumber of years, is given in Chapter XII.

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