August 2, 2011

Reconstructing the Quantity Theory (II) {12}

Part I and II of the present paper reconstruct the quantity theory from structural axiomatic foundations. This yields a coherent view of the interrelations of quantity of money, transaction money, saving–dissaving, liquidity–illiquidity, rates of interest, leverage, allocation of labor, prices, profits, and employment. Part II focuses on the symmetric and asymmetric process of nominal and real saving–dissaving and on the monetization of nonfinancial assets. The distinction between liquidity preferences of individual households and the household sector as a whole proves to be crucial. From the objective structural axiom set follows a structural inflation formula.