Crime Against Humanity: Pensée Unique in Economics, 37

One of the difficulties in answering the question “what is money?” in relation to Gross Domestic Product is that in this context money is only that which changes hands, not that which remains idle in one’s pockets. And the negligible detail above clarifies that difficulty, too: almost all this money changing hands is purchasing power created out of nothing by banks.

Once disaggregated both transactions and money, Werner puts the neoclassical foundation back to the test, but this time separatedly: how is the ratio of transactions to money that are both part of the Gross Domestic Product? How is the ratio of those that are both not part of it? That is, how are the “velocities” in production and in speculation, respectively? Constant. Both of them.

Gross Domestic Product represents only production−related transactions, prior to this disaggregation it was compared to money used for both production−related and speculation−related transactions, and the resulting ratio was declining: there is surplus money and it is not production−related.
The ratio of production−related transactions to production−related money is constant: that money is used for production.
The ratio of speculation−related transactions to speculation−related money is constant: that other money is used for speculation.
That’s where the money goes.
And, by the way, comparing the sizes of the speculation−related and production−related sides in time tells us another interesting tale, too: the size and trend of the problem.

Then Werner “follows that money”: who controls it, and with what effects? This thread begins with the concept of market equilibrium and disequilibrium, and a market is said to be in equilibrium if the economic entities in it can adjust their economic relationships freely, that is, prices move freely to the level that equalises demand and supply without constraint or interference; a market in such a condition is said to “clear”.

Crime Against Humanity: Pensée Unique in Economics