The Value of Money and the Velocity of Money
I live in Spokane Washington USA. I would pay ~$1 for a brand name restaurant burger. Another person from a tourist trap, in the US of A, can pay $2 - $3 for that same burger brand. GDP from two burgers from two different markets is $3 - $4. From the Torsors… viewpoint, I just added two dollar denominated transaction. GDP contains no useful information as to the mechanism of the two markets. I can subtract the two markets but I need an origin. I will use Spokane as the origin and get -$1 to -$2. This is a loss. From a business fluctuation view, I experienced a contraction. This means the dollar amount spent is a torsor and the velocity of money is a group.
The two markets are at equilibrium yet have different velocities of money. Velocity of money has a relationship to capital expenditures, which in turn are used in the production of something. Neoclassical Production Theory’s Isoquant analysis is an equivalent relationship between labor and capital. When I go to the tourist trap I have, in effect, transformed my local market’s value added chain (topological lift). A moving frame (Maurer-Cartan form) can accomplish this.
The relative GDP can use by this Cowardly, Democratic controlled Congress and G W Bush our Fascist, Semi-Dictator. If one uses US of A as the origin and China as the destination, our economy can move into an expansion phase. Everybody needs to move to China. Our government, in exile, can pass laws that will nullify the weak Yuan. China’s hyperinflation will not economically hurt our citizens with such a law. Return of invested capital can be manipulated using the US of A’s original frame of reference. Use of this frame will insure our GDP will be higher when implementing fiscal and monetary policy. Woops, those “debt doesn’t matter” economist and Wall Street will not like this plan because US of A’s land value will go to zero (no demand). The previous sentence means that housing has no intrinsic value. Bush and Wall Street’s price fixing of housing was inheritably unstable.
My previous post gives the math behind economic waves. The true cause of the Great Depression was Germany’s attempt to pay off its war debt and keep their economy from crashing by printing money. Inflation destroys capital, which must be reacted to, by global investors. Germany became too risky for investments.
US of A is in the same economic condition. Federal Reserve’s monetary inflation is being transformed into price inflation. There are no safe investments in the US of A with the exception of commodities such as gold, silver and oil (etc..). Inflation has decreased real wages and destroyed capital. Collateralizing housing, as a means to drive up debt ceilings, is history. Foreign investors want their money back.
This Cowardly, Democratic controlled Congress and G W Bush our Fascist, Semi-Dictator’s economic stimulus plan will become money flushed down the toilet without fixing our trade deficit. The free market has pointed the way. We must become Internet Porn Stars and YouTube Celebrities.
