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The Secret of Money

# The Secret of Money

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In stagnant society, with no changes in economic rationality, the value of national product (PQ), which represents offer, is equal to demand, which is the product of quantity of money in circulation (M) and velocity of money circulation (V):

Blog: http://non-credit-money.smirkingwhale.com/
In stagnant society, with no changes in economic rationality, the value of national product (PQ), which represents offer, is equal to demand, which is the product of quantity of money in circulation (M) and velocity of money circulation (V):

Blog: http://non-credit-money.smirkingwhale.com/

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12/01/2010

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THE SECRET OF MONEY
E-mail:sm.serbon@neobee.netIn stagnant society, with no changes in economic rationality, the value of national product (PQ), which represents offer, is equal to demand, which isthe product of quantity of money in circulation (M) and velocity of moneycirculation (V):PQ = MVQuantity of money in circulation (M) is equal to:
PQ
=
(P = price level = const.; Q = quantity of products)In a dynamic society, where economic rationality increases, there exist anincrease in production (dQ) and offer (PO+PdQ) and a decrease in velocityof money circulation (-dV) and demand (MV+MdV), and that requires anadditional quantity of money in circulation (dM), in order to preserve theequilibrium of offer and demand:

dV MdV  PdQdM
+=
Required additional quantity of circulation money (dM) is computed bydefining coefficient k:
demand demand offer
=
)()()(
dV MdV  PdQMdV MV MdV MV  PdQ PQ
+=+++=
dM dV MdV  PdQkM
=+=
Coefficient k represents the rate of increase of quantity of money incirculation which is needed to obtain an increased production in thecircumstances of retarded velocity of money circulation.Additional quantity of money in circulation (dM), being a percentage of quantity of money in circulation (kM), must be emitted as non-credit money,i.e. gift , in the form of pensions and children allowances.Using a portion of this money, the amount being
dV  PdQ
+
, an increase in production is obtained and this portion ends up as producers profit, while theamount of
dV MdV
+
, compensates the retarding in velocity of money circulation, and this portion represents consumers surplus, i.e. consumer profit.The sum of incomes in a society is composed of incomes which are builtinto expenses, i.e. costs and incomes obtained from the additional quantityof money in circulation, which are then as non-credit money granted to thesociety, as surplus of utility obtained from the increase in economicrationality.