Book « Relative Theory of Money v2.718 » - rev. 1.3.7 (Github rev. )

On the Quantitative Money Theory

The general definition of the value field allows to find common economic results at the limits. Thus, let the equation of the value field be:

dJx = dMx - Px × dCx + dMfx - Pfx × Cfx

In the case of a balanced pseudo-isolated economy of null local creation of money, we have then:

0 = dMfx - Pfx × Cfx

Or also:

dMfx = Pfx × Cfx

Along a circular line of exchange, we have then by doing a complete turn, during a time “t”:

\int^t_0 \sum^n_{k=1}{dMfk} = \int^t_0 \sum^n_{k=1}{Pfx × Cfx}

Which, if the production remains unchanged, and with stable prices, and for a time short enough during which the production stays similar, and where producers are not replaced by the next generation, gives us the result of the quantitative theory of money:

M \times V = P \times C

Where V = t = number of complete cycles of monetized exchanges.


Circular lines of exchanges of value and money (Luc Fievet RTM 2.0)

Which is then an equality concerning only global and integrable quantities. This result does not consider the local fluctuations of the space-time reference frame, and is only valid within a pseudo-isolated economy, for a short time when changes - be they productive, individual or monetary - are negligible.

The bias of an only global vision is the non-relativity of measure of value. Because globally we find here or there an “exchange of values” we will decide that value is “here”. Yet this measure only concerns its actors, and is not stable neither in time, nor in space (from other individuals’ point of view).


LETS and non-monetized values in the central “debt” money (Luc Fievet RTM 2.0)

That is if money is created asymmetrically, not dense, the value is stored or exchanged very heavily in another part of the economy without being monetized (if hollow), or the creation of a new local currency becomes necessary (creation of LETS).

As this is a phenomenon of accumulation, coming out from this deadlock can be achieved either via the hyperinflation of sub-monetized values, which can be done by violently issuing remedial money or by the gradual process of Universal Dividend, which monetizes the economy gradually and in a sustainable manner.

As we noted in the calculation of the optimal Universal Dividend, one can get out of distortions by setting the desired rate of Universal Dividend. It is obviously a strong need to conceive a fully transparent and stable configuration in time, otherwise it is not surprising to see a surge of violent economic behaviors, anticipating choices which are subject to suspicion regarding their subsequent changes.

This is a complete reversal of the current paradigm in 2010! Instead of Central Banks that are trying to maintain arbitrarily end of life values with hidden and suspicious monetary emissions that promote a caste of initiated leaders in place, and therefore the artificial and unhelpful upholding of monopolies on old values, we need a currency with a stable, dense and transparent issuance, in which the values fluctuate, and the individual economic positions change with respect to the freedom of each individual, by strongly encouraging individual creativity.

So if we take the axioms of the Quantitative Theory of Money, which defines the money as:

  • Accounting unit

  • Medium of Exchange

  • Store of Value

The paradigm of the RTM which defines it as the four freedoms of democratic change of the code, access to resources, production and trade, invalidates the consistency of these axioms. “Store of Value” is inconsistent with the medium of exchange. The currency cannot be compatible with these two concepts at the same time. Only a short period of time allows to consider a stable value of the money, like any other economic good or service. Its universality as a medium of exchange in space and time can be ensured with this pseudo-steady value only via a stable issuance.

This is the historical experimental evidence that validates the RTM against the QTM. No money has been maintained as it was turning into a store of value at the expense of its trading function.