You Create Money

1.1 The Money Velocity Cycle

We are going to start with the definition of Velocity (Thorndike Barnhart, World Book Dictionary.)

Velocity:  N. 1. Quickness of motion; speed; swiftness; rapidity.  2.  rate of motion in a particular direction.  3.  the absolute or relative rate of operation of action.   Adj.  of or having to do with the rapidity of rate of motion or action: velocity ratio.

Derivation [< Latin Velocitas < Velox, Ocis  Swift]

 The following three Axioms will cover money relating to how money has velocity.  I have discussed earlier that money is a symbol.  It is a symbol that represents value which is created by you the producer of goods and services.  It is also a symbol that represents energy.  This is the energy you create or generate and convert into goods and services as you create them.  Therefore, money is a symbol, it represents the value of goods and services you have created and marketed on the Open Market.  Money, you receive in exchange for the created goods and services you place on the Open Market, also represents the energy you create and convert into goods and services.

I am going to be talking about this energy as it flows throughout the society and mankind.  All people are connected together through this energy.  If a person is alive, no matter how much or how little, they have money energy flowing through them.  Only when they are dead does money energy cease to flow through them.

• Axiom 151:  Money velocity is the rate at which money changes hands while being exchanged on the Open Market for goods and services.

• Axiom 151.1:  As money velocity increases while flowing through the hands of the people in the society, when buying and selling goods and services on the Open Market, their affluence level increases. 

• There is a corollary (corollary 1) to this Axiom: As money velocity decreases while flowing through the hands of the people in the society, when buying and selling goods and services on the Open Market, their affluence level decreases.

• Axiom 152:  Increased production efficiency increases money velocity.

• When people get more efficient in production, they produce and place more goods and services on the Open Market in a given period of time.  With more goods and services entering the Open Market in a given period of time, more money changes hands over that period of time.  Here we see money velocity increase, which in turn increases prosperity.

The money velocity cycle is an action that occurs over and over again daily, weekly and yearly in a producer rewarded Open Market society.  In a non-producer rewarded society this cycle dies as does the society.  The American Indian societies, as they were known, died out because their ability to produce was shut down due to the intrusion of Immigrants across the Indians production territory.  Their money velocity decreased as their production levels dropped.  The Indians used money in the form of shells, beads etc.  They also used a barter system.  The use of a barter system also has velocity, it is called barter velocity.

We find the frequency of the money velocity cycle increase and decrease depending on the production level and producer pay or reward in the society.  If the money velocity cycle speeds up, the society becomes more affluent.  If the money velocity cycle slows down, the society becomes less affluent.

Money velocity gets its rates of motion from the level of production occurring in the society and the producers receiving all the money they have created in producing goods and services.  When producers receive more money than they have created in their production they are receiving money that has been created by other producers.  This causes a decrease in money velocity and prosperity in their society.  When producers are paid less than their production is worth money velocity and prosperity in that society will decrease.  When producers are paid their

productions worth, in money units, money velocity and prosperity are optimum.

During the first part of the money velocity cycle, goods and services flow to the Open Market in exchange for money taken off the Open Market by producers. During the second part of the money velocity cycle, money flows to the Open Market in exchange for goods and services taken off the Open Market by producers.  There is a continuous and varying velocity flow of money and goods and services to and from the Open Market.

 The best way to get the optimum (best or most favorable) rate of motion in money velocity is to pay, reward, only those people who have produced and placed goods or services on the Open Market.

Producer Rewarded Open Market Economics
The Science of Economics
By RP Obrigewitsch
April 4, 1993
Rev. August 22, 2011

Tags: affluence, affluent, axioms, barter, cycle, efficiency, Energy, goods, money, money velocity, money velocity cycle, Open Market, producers, production, services, velocity