Flow of Money ABSTRACT: There are two basic pathways for money - Savings and Consumption. Barks are the intemmeciaresin the exchange Detwesn consumption and savings. The rate matsavings Is convertod info consumton is determined oy Me evel of borrowing Dy hous nanies, ard government Since borrowing reflec the amount of savings in circuiaon for consumaton, the apceleratonievaraging) or tne deceleration (dolaveragng) of dabtaecis re money supely at detormes prices, wages, ane output ine money tha mate's Leveraging increases Ine amnount of money in consumaton ceufaion Deleveraging decreases he amountot money in consumption circulaton. Therefore, as related to agaregate demand, borowing creates money. and savings or paying down, he principle ofcebi, dest0ys Banks are companies who hie employees, pay wages and receive interest payments for heir service. However. Banks hold a unique ‘ole 2¢ creators of creck money. and are window info al rarsaczons ine e¢onomy. Banking deposi are a snapshot of nu beavio! <0 understanding fe fon of mens) equires a model nets Banks, bovtowing and lending, slay Me cents ale. Money 's the Diood ofthe economy, and banks are the neart In the models below. savings & consumction are meantto represent nominal depos stored at Banks ready t be invested (saved) or spent (consumed). Consumption is he viable economy, ls depeets Being spenton gocds anc services -ocmans deposits lus any ash in culation ou'sice ofbarks. Savings she visible economy, iis Geposts dedicated fo Pension Funds, Money Marke! funds, fash reserves, and ote die copes. “The first models a simple version. created asa conceptual too to exclaina way ofthinkng. 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Nonna aggregate demand canbe greaieo ove! hen eogtegste comes and tt onal outbu. depending one weacy of borowng. Posthe ssl ah darn tear Neaave ws whats GevaeSe vey Seq eset sve a eng Dace of TRegcaue bined = Agerepee ingots Rggregie Prat ¢ Aggregate Tawe «Torte «Carp. erga Case- Aggregate Snvnge = Aggregee Bonourg rit Equa (05% eae 0M Seng] (0% Boronia) Exbanecr’ (am came rote Sawngs} lam Sorc Naact Contactar (0% ene| “20% Savage] © (10% Eamon) 00% Zegresie Demand Zam Qewh) {0s 2S2rgane Garena Soeme Sue) 0M ageiszie Uemura epatne Sow) SR SEAGIG = (Soe Tee ore Tonite Woes a Taser Pubcon Tees) avre* Baro) SAVINGS (i) = MEM + NB = 10 grapes Demand = Tents Ty Sine ona ener ener nae pa see caos -Asgregn Guin = Nerina Caee + Opening Cae Tawa Pat yoann, wnoss rarest spat ot aggegas® demand fore mance! sence OTE: Aggrgna Damar na vaya in cling amount comune epee ene fanectnein ahh undaoandecreny amet ho mosat Hones tne nas san bo tans io stem be Ses of ete wee oy NOTE: Rafnarsng cbt woud represent a winded tom savings, then a depost ine coving. The any afecttseggrgate demand wel be the irsecton hans fasts Sarngs ae = Cosh Reserves cf ants Bonds Shc, Penson Funds Money Mat Assouts, Tat Funds, Pnancil Deatves 2) SSEcer 2 Weiptoe uaea sn conaswsen Nanay spent on Siac Anatis VIN Prot earn en te buyng ad elng cf Franc Ast san be spent on consumption, but ate on ten etmed ts