More on the "Money Circulates" Fallacy

By Marc Gauvin (c) 15/12/2013

Reproduction expressly granted provided attribution and original link are given.


No doubt there exist the widespread illusion that money is a flowing/circulating object but it is just that an illusion and a very important part of The Money PSYOP that afflicts us so today and that has no coherent logical foundation whatsoever. 

The only provable reality about money,  is that it is a logical record of an abstract measure of value and as such has no requirement at all to circulate.  In fact,  there is no spacial or physical locality for such abstract entities as they only exist in logical space,  -10 with respect to A,  or +10 with respect to B does not occupy physical space and therefore is not subject to physical circulation.  Only because our memories are not perfect and/or we lack sufficient trust, do we record such records on physical supports so that we can mutually bear witness to the records in an unequivocal fashion.  However and apart from the question of memory and mutual trust,  there is no requirement for such supports to circulate in order for them to exist and accomplish their logical function.  Therein lies the fallacy of money being a circulating object of value. 

This has always been the case it is not just the case for electronic transactions,  but electronic transactions make it unequivocally clear because they reproduce the following without any physical tokens moving from one place to another:




Mary, Jim and John transact goods and services and each keep tract of their corresponding balances without any need to use any ciruclating tokens. Each transaction generates their own numbers that are then resolved against existing balances,  therefore there are no circulating tokens.

Another important proof that money as a circulating object is a misrepresentation of reality, is that prior to any transaction all balances are at zero,  therefore there cannot exist a stock of tokens anywhere to transfer/circulate between agents.  It is only when we effect transactions of goods and services that numbers appear to represent their value and only in such a context can the units have any meaning. Note that bills and coins only have meaning precisely because they are subtracted from previously existing balances on account.

In the chapter titled "Putting it All together" of my book "The Money PSYOP"  you can see clearly the logical relationship and dependencies between money, accounts and temporary supports (bills and coins) and how we have been bamboozled into the false model of money as a scarce circulating object of value, independent of its only logical function which is that of a an annotation of an abstract measure of the value of real goods and services.

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