Open AccessA Unified Theory of Monetary Dynamics
Author(s) -
José Villacís
Publication year - 2016
Publication title -
review of social sciences
Language(s) - English
Resource type - Journals
eISSN - 2378-8569
pISSN - 2378-8550
DOI - 10.18533/rss.v1i4.11
Subject(s) - economics , circulation (fluid dynamics) , multiplier (economics) , endogenous money , quantity theory of money , monetary economics , money creation , capital (architecture) , keynesian economics , monetary policy , macroeconomics , central bank , mechanics , physics , archaeology , history
In the end, the only and eternal vocation of money is circulation. This circulation causes the contrary effect to income expansion, studied by the income velocity of circulation of money, by the income multiplier and by the bank money multiplier. These three issues are thought to belong to the same operation. Therefore, a unified money theory can be established. A dynamic economy finances investments with the savings existing in the system but, the economy is simultaneously growing in real and nominal terms. Such growth in circulating capital is only possible through the creation of money in the economic system. In general terms, the system tends to finance growth with the spontaneous creation of money.