You Create Money

A Producer Rewarded Economic System

2. Production and Prosperity

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Revised November 13, 2013

Production is the basic thrust of all mankind toward prosperity.  Production and prosperity go hand in hand.  Production by the Producer creates or generates prosperity.  Production enhances the prosperity of the Producer.  Production increases the Producers ability to exist.  The prosperity thrust of the individual demands production take place to forward the individual in his quest to exist.  This production has exchange value.  This exchange value is determined or generated by the needs and wants (demand) of each producer in the societies.  This exchange value is found to be inherent in what the individuals of each society have agreed to be defined as “their” money unit.

We will examine how money is created through production.  If one person produces milk, another person produces eggs, another produces coats, another produces computers and another producers cars.  We then have these people producing in their specialties.  Each of these Producers needs and wants (demands) the production created by the other Producers.  Each Producer needs and wants (demands) the production of other Producers for his or her prosperity, consumption or esthetic admiration and/or pleasure.

Producers have developed a system of exchange among themselves to accommodate their demands for each others production.  At first a barter system was set up where producers traded commodities, trades, goods and services with each other based on the value they assigned to each commodity, trade, good and service.  The value was generated by the amount of commodities, trades, goods and services available in respect to the demands for the commodities, trades, goods and services.  If there was an abundant supply of a specific good and the need was low for it, the demand was low.  A low demand would give a lower value for that good.  If there was a low supply of a specific good or service and the need for it was high, the demand would be high.  A high demand would give a high value for that good or service.

From this working together of need, demand and supply, the Producers worked out an exchange ratio among all commodities, trades, goods and services on the Market.  This ratio is the exchange relationship among all commodities, trades, goods and services on the Market.   The exchange relationship shows the number of times the value of one commodity, trade, good or service is contained within the other commodities, tradies, goods and services on the Market.  This is called the exchange rate.

We may find one hundred dozen eggs being traded for one coat, two dozen eggs being traded for on gallon of milk, fifty gallons of milk being traded for one coat, five hundred dozen eggs being traded for one computer, two hundred gallons of milk being traded for one computer or ten computers being traded for one car, etc.  These are the trading ratios which are being used by the Producers to achieve equity in product value when trading their products directly.  These ratios have established exchange value in terms of one product to another.

From this information or data it can be deduced that products have exchange value, generated by demand from Producers, which can be defined in terms of all other products.  In fact, all products created by Producers, throughout mankind, have exchange value which can be defined in terms of each other.

For example; one dozen eggs is equal in value to one/one hundred (1/100) of a coat.  One coat is defined to equal one hundred (100) dozen eggs in value.  One car is defined to equal one hundred (100) coats or ten thousand (10,000) dozen eggs or five thousand (5,000) gallons of milk or ten (10) computers.  We could define the exchange value of all production based on each product and determine how to exchange commodities, trades, goods and services based on that specific product.  The selected product could be dozens of eggs.  We could determine the exchange rate of all products based on the value of dozens of eggs.  As we can see this would be very unworkable.  The egg production would go wild. Everyone would be growing eggs as a short cut to having money.  This would lead to a constantly expanding medium of exchange (eggs) and a collapsed economic system.

Do you see how the value of commodities, trades, goods and services are determined on the Open Market?  One could go on and complete tables and tables defining the exchange value of each product produced by all members of mankind in terms of all other products produced by all of Mankind.  This becomes a very, very bulky and unworkable system.  We need some sort of simplification and standardization here.

Producer Rewarded Open Market Economics
The Science of Economics
By RP Obrigewitsch
Revised November 13, 2013

10. A Barter or Money Based Market?

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Revised November 21, 2013

The Market is either based on barter or it is based on an exchange symbol.  Today money is being used as the exchange symbol.  Money is being used as the medium of exchange.

In the barter system, which is basic marketing, production is exchanged directly.  It is exchanging production for production.  The value of the exchanged commodities, trades, goods and services is established and defined in terms of products.  An example would be 30 dozen eggs equals one coat, or one coat equals 30 dozen eggs.  One gallon of milk could be defined in terms of having the value of 2 dozen eggs.  Or it could be said that one television would have the value of 400 dozen eggs.  We could define the value of all production in terms of eggs or milk or a standard television.  Instead, we use the money symbol.   The money symbol injected into the system acts as a medium.  Money is a medium for value and energy transmission.  All value of products and services is measured in money units.

In the Money Symbol Open Market System, the value of the exchanged produced commodities, trades, goods and services is established and defined in money units.  The money units become packets of value.   You can carry them in your pockets, wallet, or purses.  You use these packets of value when purchasing commodities, trades, goods and services for your use and consumption.  This is how paper and coin, called money, acquires its value.

In the Money Symbol Open Market System; the energy, generated by the Producer and used to create commodities, trades, goods and services is transferred into money units when exchanging commodities, trades, goods and services for the money units.  Money units become packets of energy you carry on your person.  These packets of energy are used to purchase commodities, trades, goods and services for your use and consumption.  Money becomes packets of energy that is moved around and used to create more production

You can look at money units as packets of value and as packets of energy.  You can look at money units as both value and energy packets.  Money is a symbol that represents value of commodities, trades, goods and services and a symbol that represents energy that was created by the producer and used to create the commodities, trades, goods and services.  Value, defined in money units, tells you how much your production is worth.  Energy, defined in money units, gives us a measure of the energy created by the producer which was used to create the commodities, trades, goods or services.

Energy created by producers and transferred into production gives us the link of ownership between the producers and the production.  This energy transferred into money units as it is exchanged on the Open Market links the producer to the ownership of the money units.  The producer created the production with his energy and now owns the money units that are exchanged for it on the Open Market.

Producer Rewarded Open Market Economics
The Science of Economics
By: R.P Obrigewitsch
September 30. 2011

1.1 The Money Velocity Cycle

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revised November 16, 2013

The money velocity cycle is an action that occurs over and over again daily, weekly and yearly in a producer rewarded Open Market society.  Money velocity is the rate at which money changes hands in a society, nation and all mankind.  Money velocity is the speed of flow of money.  It is about how rapidly money passes through the hands of individuals in organizations, societies, nations and mankind.  Prosperity results with increased money velocity.  Recessions and depressions result when money velocity decreases.  In societies and nations were there is much non-producer and counter-producer rewarding the money velocity in the money velocity cycle slows.  These societies’ and nations’ economic systems recede into depressions.

In order to develop a better understanding of money velocity and the money velocity cycle we will define velocity.  We will also look at Axioms related to money velocity and the money velocity cycle.

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 commodities, trades, goods and services.  It is also a symbol that represents energy.  This is the energy you create or generate and convert into commodities, trades, goods and services as you create them.  Therefore, money is a symbol, it represents the value of commodities, trades, goods and services you have created.  The value of the commodities, trades, goods and services is established when they are exchanged on the market.  The market must be an Open Market.  The Open Market must be open to all on equal terms.  Money, you receive in exchange for the created commodities, trades, goods and services you place on the Open Market, also represents the energy you create and convert into commodities, trades, goods and services.

I am going to be talking about this energy as it flows throughout the society, nation and mankind.  All people on the planet are connected together through this energy that money represents.  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 commodities, trades, 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 commodities, trades, 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 commodities, trades, 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 commodities, trades, goods and services on the Open Market in a given period of time.  With more commodities, trades, 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 and counter-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.  When the money velocity cycle speeds up, the society becomes more affluent and prosperous.  When the money velocity cycle slows down, the society becomes less affluent and prosperous.

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 commodities, trades, 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, commodities, trades, goods and services flow to the Open Market in exchange for money.  During the second part of the money velocity cycle, money flows to the Open Market for the purchase of commodities, trades, goods and services.  There is a continuous and varying velocity flow of money and commodities, trades, 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 only those people who have produced and placed commodities, trades, 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