You Create Money

3. Medium of Exchange

This article is the third article in the series of articles covering Axiom four, “Maintain a Constant Money Supply.”

A medium of exchange began to be needed and wanted in order to make the transfer of production value more efficient and practical.

With the absence of a defined money unit, we found products being traded in ratios to each other by the Producers to satisfy their needs and wants or demands.  This was the system of exchange in economics before the money unit was conceived and developed.  The money unit became the medium or intermediate step where value could be transferred from the sale of products on the Open Market.  The money unit with its newly transferred value could be used to purchase other products.  The symbol of the money unit, used for the value transfer, has had many forms down through the ages.

Production Value is the exchange value goods and services have in relation to each other when exchanged on the Open Market, a Market that is open to all on equal terms. 

 Value is importance, worth or usefulness of a good or a service.  Competition among goods and services on the Open Market, propelled by the forces of demand, establishes the importance, worth or usefulness of each good and service.  The needs and wants, placed in terms of demand, thrust forth by the Producers, establish the importance, worth or usefulness of goods and services.  Competition on the Open Market along with the demands of the Producers gives goods and services their value.  Demand is a directed force put forth by Producers driving the competition on the Open Market.  The competition doesn’t just happen by itself; it is driven by a directed generated energy force.  This directed energy force is created by Producers.  It is a pro-survival energy force.  This force gives the Open Market its life.  The Open Market is like a living entity driven by the demand energy created by the Producers.

You could say the Open Market is like a living entity.  The Open Market gets its survival energy from the Producers.  This survival energy comes from goods and services marketed on the Open Market and from Producer directed demand forces.  The Open Market is living, it is dynamic.  Producers create the Open Market by placing their goods and services on the Open Market and then generating demand energy which they use to direct the competition among goods and services.  Producers put life into the Open Market.

Counter-producers and non-producers produce a counter-survival type of energy.  Their energy flow is reversed.  It flows from survival energy toward counter-survival energy.  One could say Producer energy is pro-survival or positive energy.  You could say non-producer/counter-producer energy is counter-survival, succumb or negative energy.  When non-producer/counter-producers enter into an Open Market they cause energy to flow from pro-survival (positive) energy to counter-survival (succumb or negative) energy.  They pull survival energy out of the Open Market.  They pull the market into recessions and depressions.  They pull the life out of the Open Market.  They suck the energy out of the societies, nations, mankind and the environment.

When the Market is broken down to its basic terms; we are really exchanging energy for energy.  When a non-producer/counter-producer enters into an Open Market they place their negative demand force on the Market.  They take goods and services out of the Market without exchanging their produced goods and services for them.  They in effect take energy out of the Market without replacing it with energy of their own.  This act drains the Producer, families, societies, nations, mankind and the environment of energy.  It brings about a state of economic decline and puts Producers, families, societies, nations, mankind and environments on a path toward succumb.

There is only one true Market.  That true Market is the Open Market, open to all on equal terms.  Whenever non-producer/counter-producers enter into an Open Market even very slightly that Market is no longer open to all on equal terms.  It is a Market with a negative energy flow.  That energy flow is from survival to succumb.  When we have a true or very close to true Open Market the energy is converted from succumb to survive.  We are in a constant battle between succumbing and surviving.  It is very important to maintain a Market where energy is flowing into the Market.

The Standardized money unit is the constant unit of measure that represents the production value and Producer generated energy.  The Producer generated energy is used in production creations.

A Constant Money Supply standardizes the money unit as a unit of measure for production value and Producer generated energy.  It is very important to maintain a Constant Money Supply. A Constant Money Supply gives a positive energy flow in the Open Market and maintains the Market as an Open Market.

An expanding money supply is a money supply that is not held constant. An expanding money supply causes a negative energy flow on the Open Market.  Money received by expanding the money supply without placing production on the Market causes a negative energy flow across the Market. In this case the energy flow in the Market is from survive to succumb.  The individuals, families, societies, mankind and environment are on the path toward succumbing. Expanding money supplies destroy Open Markets.

When the value of the dollar was floated in 1971 it was taken off the Gold Standard.  The money unit was floated.  Then the money supply could be expanded by a Central Bank at the whim of the operators of the Bank.  The dollar was now de-standardized; it was no longer a standardized unit of Measure.  The result for the United States is an economic system that is no longer standardized.  Today this economic system is operating with a money unit whose value is altered anytime the central bank expands the money supply.  The Gold Standard was removed, as a way to maintain a Constant Money Supply.  The removal of the Gold Standard allowed the money supply to be expanded by the Central Bank.

Before 1971 the money supply was held constant by defining each ounce of gold to be equal to 35 dollars.  The amount of dollars allowed to be in circulation was equal to 35 times the number of ounces of gold held in a vault.

Expanding the money supply is like allowing the Meter or Pound to be arbitrarily changed in size and weight.  This would be allowing these standardized units of measures to change over time.  This would cause chaos throughout the societies.  Floating a money unit, instead of holding it as a constant unit of measure, is an idea made by counter-producers and non-producers.  From the moment they float the money unit, and from then on, they can continue to steal their survival from the Producers by expanding the money supply.  There is a belief that money supplies must be expanded to maintain economic survival.  When Producers and only Producers of the money are rewarded, money supplies can be held constant and the economic systems move toward more survival.  Expanding money supplies rewards non-production and counter-production.

A Constant Money Supply maintains a very stable Medium of Exchange

 Money, as the Medium of Exchange, is the intermediate step used during the exchange of goods and services on the Market.

When money came into existence, money added a step in the exchanging of goods and services on the Open Market.  Instead of exchanging goods and services directly for other goods and services, the goods and services were first exchanged for money.  The value of the goods and services was transferred to the money unit.  The money unit was then used to exchange for other goods and services.  Value contained in the money unit was then transferred to another Producer for his/her goods and services. This is when the money unit became the standardized measure for the value of goods and services.  This is why it is very important to maintain a Constant Money Supply.  When the money supply is not held constant but allowed to expand, the money unit as the Medium of Exchange loses its standardization.  When the money unit loses its standardization economic systems get destroyed.

 It is much easier to transfer production value to a money symbol, a Medium of Exchange, than it is to transport goods and services around to make exchanges directly among them.   Once the product value is transferred to the money symbol, the Medium of Exchange, it is much easier to make purchases of other Producer’s goods and services. The concept of a money unit came into existence to act as an intermediate step during the exchange of goods and services.

Goods and services must be exchanged on the Open Market in order to determine the correct production value of each good and service.  When goods and services are exchanged on a Market that is not an Open Market, not equal to all on equal terms, production value will not be correct.  For example; in Markets where monopolistic practices are allowed, the production created through a monopolistic individual or organization will usually be incorrectly higher.  Monopolistic practices are a form of rewarding non-production and counter-production.  Rewarding non-production and counter-production will lower money value.

Only where all Producers are in the Market on equal terms and only Producers are allowed to participate in the Market will the production value of all goods and services exchanged on the Open Market be correct.

Rewarding non-production and counter-production places more money in circulation in relation to goods and services on the Market.  This leads to fewer goods and services being on the Market in relation to money in circulation.  The money value goes down as the non-producers and counter-producers bid up the prices of the existing goods and services on the Market.  When money is given to non-producers and counter-producers they are taking money without placing goods and services or without placing pro-survival goods and services on the market.  This causes more money to be in circulation.  This money is found in the pockets of non-producers and counter-producers.  They use this money to bid up the prices of goods and services on the market, thus de-valueing the money units.  Inflation is the result of having fewer goods and services on the Open Market in relation to money units in circulation.

In conclusion; during Marketing, value is transferred from goods and services to the medium of exchange measured in money units.  Money units become packets of value and can be much more easily transported over distances and used to purchase other Producer’s production. The money unit, used as a unit of measure along with a Constant Money Supply, increases the efficiency of and standardizes the economic system.  A medium of exchange composed of money units was established.  This medium of exchange becomes standardized when the money supply is held constant.

Producer Rewarded Open Market Economics
The Science of Economics
By R P Obrigewitsch
June 29, 2012

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