,*APT] #ae 
,MONEY & ,CAPITAL 

,PEOPLE 3 

,AU?OR 3 ,PAUL ,MATTICK 

,TEXT 3 

,! ,KEYNESIANS SEE ! ECONOMY AS A MONEY ECONOMY & T5D TO =GET ?AT IT 
IS A MONEY-MAK+ ECONOMY4 ,9 !IR VIEW MONEY APPE>S AS A M]E 9/RUM5T ( 
MANIPULATION = TURN+ 9SUFFICI5T 9TO SUFFICI5T SOCIAL PRODUCTION4 ,AN 
EXCESSIVE MONET>Y GR[? BY WAY ( CR$IT EXPANSION & DEFICIT-F9ANC+ MAY 
LEAD TO 9FLATION1 JU/ AS CR$IT CONTRACTION & TOO LITTLE MONEY T5D TO BE 
DEFLATION>Y4 ,TO AVOID BO? EXCESSES1 !RE MU/ BE ! 0RI<T0 
QUANTITY ( MONEY2 & IT IS ! GOV]NM5T'S FUNCTION TO >RANGE = 
?IS 0RI<T QUANTITY40 ,FISCAL POLICIES >E 9 A WAY ALSO MONET>Y 
POLICIES1 AS !Y M]ELY ALLOCATE ! 0RI<T QUANTITY0 ( MONEY 9 
! DIRECTION MO/ CONDUCIVE TO ECONOMIC /ABILITY & GR[?4 ,BUT 9 ORD] TO 
UND]/& ! DYNAMICS ( ! MIX$ ECONOMY IT IS NECESS>Y TO UND]/& ! 
RELATION%IP BETWE5 MONEY & CAPITAL4 

,WELL 9TO ! N9ETE5? C5TURY DIFF]5T NATIONS ADH]$ TO DIFF]5T 
METALLIC MONEY /&>DS - SILV]1 GOLD1 OR BO? SIMULTANE\SLY4 ,! 
PRECI\S METALS W]E ORIG9ALLY US$ NOT ONLY AS M$IA ( EX*ANGE BUT ALSO AS 
A CONV5I5T & RELATIVELY 9DE/RUCTIBLE /ORE ( WEAL?4 ,:E!R GOLD OR 
SILV] W]E PRODUC$ )9 ! MONEY-US+ ECONOMIES OR APPROPRIAT$ ABROAD BY 
COLONIZ]S & ADV5TUR]S1 ! QUE/ = GOLD 9 PRE-CAPITALI/ TIMES WAS 
MA9LY A QUE/ = MONEY4 ,! 9DIVIDUAL'S WEAL?1 AS WELL AS ! WEAL? 
( NATIONS1 WAS RECKON$ 9 T]MS ( MONEY1 :I* MEANT QUANTITIES ( GOLD & 
SILV]4 ,MONEY WAS AMASS$ = ITS [N SAKE RA!R ?AN = CAPITALIZATION 9 
O!R =MS ( MAT]IAL WEAL?4 ,! CAPITALI/ SY/EM ADAPT$ ?IS M]CANTILI/ 
MONEY SY/EM TO ITS [N1 DIFF]5T 5DS4 

,AS CAPITAL1 MONEY IS BO? MONEY & MORE ?AN MONEY4 ,AL?\< CAPITAL IS 
CONCEPTUALLY MONEY1 ?IS CATEGORY EMBRACES NOT ONLY GOLD BUT ALL O!R 
COMMODITIES AS WELL1 = ANY COMMODITY CAN TAKE ! PLACE ( MONEY BY 
EXPRESS+ ITS COMMODITY-VALUE AS A MONEY-VALUE4 ,! [N]S ( CAPITAL >E NOT 
TRY+ TO AMASS A P>TICUL> COMMODITY - GOLD 9 ?IS CASE - BUT TO 
ACCUMULATE ! MONEY-VALUES ( !IR CAPITALS1 :I* MAY TAKE ON ANY PHYSICAL 
%APE4 ,AMASS+ MONEY1 EV5 9 ! =M ( GOLD1 W\LD YIELD !M NO?+ 
BEYOND ! MONET>Y HO>D4 ,MONEY YIELDS ADDITIONAL VALUE ONLY :5 IT IS 
APPLI$ 9 A PRODUCTIVE 5T]PRISE4 ,! CAPITALI/IC ACCUMULATION ( MONEY 
PRESUPPOSES ! ACCUMULATION ( CAPITAL1 EV5 ?\< ! ACCUMULATION ( 
CAPITAL REQUIRES AN 9ITIAL ACCUMULATION ( MONEY4 

,CAPITAL EMPLOYS LABOR3 IF MONEY IS TO FUNCTION AS CAPITAL IT MU/ FIR/ 
CEASE TO BE MONEY & BE TURN$ 9TO 9/RUM5TALITIES ?AT PUT LABOR]S TO 
WORK4 ,!SE 9/RUM5TALITIES1 ! MEANS ( PRODUCTION1 >E COMMODITIES ) A 
VALUE1 OR RA!R PRICE1 EXPRESS$ 9 MONEY T]MS4 ,BY !MSELVES1 !SE MEANS ( 
PRODUCTION >E AS UNPRODUCTIVE AS MONEY IS 9 ITS MONEY =M4 ,!Y BECOME 
PRODUCTIVE ONLY 9 ! LABOR PROCESS4 ,! LABOR NOT ONLY REPRODUCES ! 
EXI/+ CAPITAL1 & !RE) ITS VALUE 9 ITS MONEY EXPRESSION1 BUT ALSO 
PRODUCES A SURPLUS :I* TURNS CAPITALI/ PRODUCTION 9TO CAPITAL =MATION4 
,?IS IS AGA9 EXPRESS$ 9 MONEY T]MS BY ADD+ ! CAPITALIZ$ SURPLUS TO ! 
PREVI\SLY EXI/+ CAPITAL2 BUT1 AS BE=E1 ! ADDITION ( 
0MONEY0 IMPLIES ! ADDITION ( MEANS ( PRODUCTION 9 A CONT9U\S 
CAPITAL EXPANSION PROCESS4 

,ACCUMULAT$ CAPITAL REPRES5TS MONEY VALUES :I* HAVE ! =M NOT ( MONEY 
BUT ( COMMODITIES & CAPITAL4 ,CAPITAL IS REPRODUC$ ONLY GRADUALLY1 = ! 
MEANS ( PRODUCTION DET]IORATE1 OR BECOME OBSOLESC5T1 ONLY OV] A NUMB] ( 
YE>S4 ,! SL[ DEPRECIATION ( CAPITAL IS CALCULAT$ 9 DEPRECIATION *>GES 
:I*1 TOGE!R ) ALL O!R CO/S1 >E ADD$ TO ! PRICES ( COMMODITIES TO 
BE REALIZ$ 9 ! M>KET4 ,COMMODITIES (F]$ ON ! M>KET MU/ BE B\<T 
) MONEY1 BUT1 S9CE ! COMMODITIES :I* >E B\<T OR SOLD ON ! M>KET 
AT ANY GIV5 TIME REPRES5T ONLY A FRACTION ( ! TOTAL CAPITAL 9 EXI/5CE1 
ONLY A FRACTION ( ! TOTAL WEAL? ( SOCIETY NE$ EXI/ 9 MONET>Y =M4 

,COMMODITY EX*ANGE1 OR ! CIRCULATION ( COMMODITIES FROM ONE PLACE TO 
ANO!R1 DOES NOT REQUIRE A MONET>Y M$IUM4 ,IT IS ACTUALLY C>RI$ ON BY HUMAN 
LABOR & ! MEANS ( TRANSPORTATION UTILIZ$ BY LABOR4 ,:AT MONEY M$IATES 
& CIRCULATES >E NOT COMMODITIES BUT PROP]TY CLAIMS ATTA*$ TO COMMODITIES4 
,H[EV]1 IT IS ONLY BY WAY ( SU* PROP]TY CLAIMS ?AT ! ACTUAL PRODUCTION 
& DI/RIBUTION PROCESS IS C>RI$ ON4 ,?IS NE$ NOT 9VOLVE A SPECIFIC TYPE 
( MONEY1 H[EV]2 ANY M$IUM ABLE TO DESIGNATE ! V>I\S CLAIMS & 
C\NT]-CLAIMS 9 ! EX*ANGE PROCESS WILL DO AS WELL AS ANY O!R4 

,AS MONEY1 GOLD 5T]S NEI!R PRODUCTION NOR CONSUMPTION2 !RE=E1 ! 
LABOR & CAPITAL EXP5D$ 9 ITS PRODUCTION YIELDS NO SURPLUS4 ,! GOLD 
PRODUC]S !MSELVES1 ( C\RSE1 PR(IT BY GOLD PRODUCTION1 JU/ AS O!R 
CAPITALI/S MAKE PR(IT 9 O!R BRAN*ES ( PRODUCTION2 BUT FROM ! PO9T ( 
VIEW ( SOCIETY AS A :OLE1 MONET>Y GOLD CON/ITUTES AN EXP5SE ( ! 
CIRCULATION PROCESS4 ,! LESS GOLD IS NE$$ AS A M$IUM ( EX*ANGE1 ! LESS 
EXP5SIVE IS ! EX*ANGE PROCESS4 ,! CORRESPOND+ SAV+ 9 ! PRODUCTION 
CO/S ( GOLD CAN BE APPLI$ TO O!R1 PR(ITABLE1 5DS4 ,AL?\< MONEY AS GOLD 
WAS ONCE ! V]Y 9C>NATION ( ALL WEAL? & P[]1 9 CAPITALISM IT IS A 
CO/ ( CIRCULATION4 ,= ?IS REASON !RE WAS FROM ! V]Y BEG9N+ ( 
CAPITALI/ DEVELOPM5T A /RONG T5D5CY TO *ANGE ! M$IUM ( EX*ANGE FROM 
ITS MAT]IAL 9TO AN IDEAL EXI/5CE1 I4E41 TO REPLACE COMMODITY MONEY ) 
SYMBOLIC MONEY4 

,! SAME DEVELOPM5T :I* L$ TO ! QUITE G5]AL ADOPTION ( ! GOLD 
/&>D ALSO WITNESS$ ! EM]G5CE ( NEW & DIFF]5T CATEGORIES ( M$IA 
( EX*ANGE1 SU* AS BANK NOTES & *ECK+ MONEY4 ,!RE W]E !N BO? 
PHYSICAL & NONPHYSICAL MEANS ( PAYM5T2 ! LATT] W]E BR\<T 9TO SOME 
RELATION TO ! =M] BY MEANS ( A GOLD BACK+ :I* S]V$ AS A SAFEGU>D 
AGA9/ ! OV]-ISSUE ( TOK5 MONEY4 ,) ! EXT5SION ( CR$IT 
9/ITUTIONS ! MONET>Y SY/EM BECAME 9CREAS+LY MORE COMPLEX4 ,BANK CR$ITS 
BECAME ! PR9CIPAL M$IUM ( PAYM5T & /&>D MONEY BEGAN TO PLAY A 
SUBSIDI>Y P>T4 

,?IS DEVELOPM5T GAVE RISE TO ! NOTION ?AT ! CR$IT & DEBIT SY/EM 
SUP]C$ES ! MONEY SY/EM4 ,AL?\< ! CONCEPT ( MONEY1 IT HAS BE5 SAID1 
IS DEP5D5T ON ?AT ( DEBT - = EV]Y SALE ( GOODS & S]VICES GIVES 
RISE TO A 0DEBT0 ?R\< ! 9T]VAL BETWE5 PUR*ASE & SALE 
- ! CONCEPT ( DEBT IS NOT DEP5D5T ON ?AT ( MONEY1 = A DEBT CAN 
BE CANCEL$ BY ANO!R DEBT )\T REC\RSE TO MONEY4 ,BANK CR$IT CAN ?US 
EXI/ )\T MONEY4 ,ALL DEBTS1 H[EV]1 >E RECKON$ 9 T]MS ( MONEY4 ,& 
EV5 IF PAYM5TS >E MADE & RECEIV$ BY *ECK1 & !SE *ECKS CANCEL EA* 
O!R 9 ! CLE>+ SY/EM ( ! BANKS1 !SE TRANSACTIONS 9VOLVE O!R 
TRANSACTIONS 9 ! PRODUCTION & EX*ANGE PROCESS 9 :I* CURR5CY S]VES AS 
A M$IUM ( EX*ANGE4 ,MOREOV]1 BUS9ESS IS NOT C>RI$ ON 9 ORD] ?AT 
BUS9ESSM5'S CLAIMS ON ONE ANO!R MAY BE MUTUALLY CANCEL$1 BUT 9 
ORD] TO MAKE PR(IT4 ,RECEIPTS MU/ BE L>G] ?AN EXP5DITURES2 MONEY MU/ BE 
MADE4 ,ANY QUASI-MONET>Y SY/EM ( PAYM5T IS M]ELY AN 9/RUM5T TO 
FACILITATE ! MAK+ ( MONEY4 ,TO SEE 9 ! CR$IT & DEBIT SY/EM ( 
PAYM5TS A =M ( MONEY IS TO SEE MONEY ONLY AS A M$IUM ( EX*ANGE4 ,BUT 
?\< CAPITALI/ EX*ANGE IS AN EX*ANGE ( COMMODITIES & ( S]VICES 
TREAT$ AS COMMODITIES1 MONEY IS H]E MORE ?AN A M$IUM ( EX*ANGE BECAUSE 
COMMODITY EX*ANGE ITSELF IS M]ELY A MEANS = ! AUGM5TATION ( 
CAPITAL4 

,! WEAL? ( NATIONS & ! PROP]TY ( 9DIVIDUALS CAN BE EXPRESS$ 9 
T]MS ( MONEY & 9 T]MS ( !IR PHYSICAL POSSESSIONS4 ,BUT ?IS WEAL? DOES 
NOT EXI/ TWICE1 ONCE AS REAL PROP]TY & ONCE AS MONEY4 ,ONE MAY HAVE EI!R 
! ONE OR ! O!R4 ,A BUS9ESS 5T]PRISE MAY BE B\<T OR SOLD = A C]TA9 
AM\NT ( MONEY4 ,MONEY IS H]E NOT A M$IUM ( EX*ANGE BUT IS ITSELF EX*ANG$ 
= PROP]TY2 IT IS ! EQUIVAL5T ( REAL ?+S - ( PROP]TY4 ,TO BE 
EX*ANGEABLE1 MONEY ASSETS CANNOT DIFF] FROM REAL ASSETS4 ,9 ?IS RESPECT IT 
IS NOT CORRECT TO SAY ?AT BANK CR$IT CAN EXI/ )\T MONEY1 = ! CR$IT 
GRANT$ IS GRANT$ = A COLLAT]AL :I* REPRES5TS MONEY1 EV5 ?\< ?IS 
0MONEY0 HAS = ! MOM5T ! =M ( REAL PROP]TY4 

,9 CAPITALISM1 MONEY EXI/S AS CAPITAL1 :I* APPE>S 9 FIX$ OR 9 
0LIQUID0 =M4 ,9 ITS 0LIQUID0 =M IT MAY HAVE ! 
%APE ( COMMODITY-MONEY 7GOLD71 OR ! %APE ( TOK5-MONEY REPRES5T+ 
EI!R GOLD OR ANY O!R COMMODITY ?AT COMPRISES MAT]IAL WEAL?4 ,S9CE ALL 
REAL ASSETS >E POT5TIAL MONEY ASSETS & ALL MONEY ASSETS >E POT5TIAL REAL 
ASSETS1 BUS9ESSM5 NE$ NOT DIFF]5TIATE BETWE5 QUASI-MONEY & REAL MONEY4 
,BO? FUNCTION EQUALLY WELL 9 SETTL+ EX*ANGE RELATIONS BETWE5 BUS9ESS 
FIRMS4 ,BUT ?IS IS SO ONLY BECAUSE REAL MONEY AS WELL AS QUASI-MONEY >E BO? 
COV]$ BY REAL CAPITAL ASSETS4 ,:]E !RE >E NO REAL CAPITAL ASSETS1 CR$IT 
MONEY DOES NOT APPLY4 ,( C\RSE1 !RE IS ALWAYS ! RISK ?AT SEEM+ REAL 
ASSETS1 :I* S]VE AS COLLAT]AL = CR$IT MONEY1 MAY TURN \T NOT TO BE 
REAL2 9 :I* CASE ! C\RTS WILL F9ALLY HAVE TO SETTLE DEBTS BAS$ ON 
0QUASI-PROP]TY40 

,BEH9D MONET>Y TRANSACTIONS /& ! CAPITAL VALUES ( BUS9ESS FIRMS1 NOT 
ONLY 9 !IR MONET>Y EXPRESSION BUT ALSO AS MAT]IAL 5TITIES 9 !IR 
COMMODITY =M4 ,! WAGE-E>N+ 7& SAL>I$7 CLASSES DO NOT G5]ALLY HAVE 
?IS K9D ( COLLAT]AL4 ,BUT !Y MAY HAVE P]SONAL PROP]TY ON ! SECURITY ( 
:I* !Y CAN BORR[ MONEY4 ,!SE CLASSES SELL !IR LABOR-P[] AS 
COMMODITIES = MONEY4 ,!Y GET PAID AFT] !IR WORK P]=MANCES 9 DAILY1 
WEEKLY1 OR MON?LY 9T]VALS4 ,! LABOR ALREADY P] =M$ IS ! COMMODITY 
?AT IS REMUN]AT$4 ,%ORT ( !IR SAV+S1 ! TOTAL MONEY 9COME ( ! 
WAGE-E>N]S EQUATES ) ! TOTAL PRICES ( ! COMMODITIES !Y BUY4 ,!RE 
IS1 !N1 AN EX*ANGE ( COMMODITIES AGA9/ COMMODITIES4 ,! MONEY M$IAT+ 
?IS EX*ANGE IS H]E A M]E ACC\NT+ DEVICE1 & AS SU* NE$ NOT HAVE 
COMMODITY =M4 

,USUALLY1 ! VALUE ( MONEY IS MEASUR$ BY ITS DE FACTO COMM& OV] GOODS 
& S]VICES4 ,= 9/ANCE1 ! VALUE ( A P\ND1 OR ( A DOLL>1 IS DET]M9$ 
BY :AT ONE CAN BUY = ONE P\ND1 OR = ONE DOLL>4 ,?IS LEAVES OP5 ! 
QUE/ION :Y ?IS IS SO4 ,!RE MU/ BE SOME?+ AB\T A P\ND OR A DOLL> 
:I* EQUATES ) SOME?+ ?AT ADH]ES TO ! COMMODITIES :I* !Y CAN 
BUY4 ,FROM ! /&PO9T ( ! OBJECTIVE !ORY ( VALUE1 AN ANSW] IS EASILY 
F\ND4 ,IF GOLD IS MONEY & GOLD IS A COMMODITY1 ! CO/S ( PRODUC+ ! 
GOLD CONTA9$ 9 A DOLL>1 OR 9 A P\ND1 >E !N CONSID]$ EQUAL TO ! 
PRODUCTION CO/S ( ! COMMODITIES :I* !Y >E ABLE TO BUY - 
MODIFI$1 ( C\RSE1 BY ! *ANG+ DEM& & SUPPLY RELATIONS ( ! 
M>KET4 

,MONEY ?US HAS 9 !ORY A COMMODITY-VALUE EQUAL TO ITS PRODUCTION CO/S4 
,ACTUALLY1 ?IS IS NOT ! CASE4 ,! COMMODITY-VALUE ( GOLD DIV]GES FROM ITS 
MONEY-VALUE1 AL?\< MONET>Y AU?OR IT IS MAY SET ! SAME PRICE = BO?4 
,FUR!RMORE1 COMMODITY-MONEY COMPRISES ONLY A FRACTION ( ! TOTAL MONEY 
SUPPLY2 EV5 UND] ! RULE ( ! GOLD /&>D1 ! ACTUAL CONV]TIBILITY ( 
PAP] 9TO GOLD AFFECT$ ONLY A SMALL PORTION ( ! TOTAL MONEY 9 
CIRCULATION4 ,TO ! EXT5T ?AT MONEY HAS A NON-COMMODITY =M1 IT CANNOT 
D]IVE ITS VALUE FROM ITS PRODUCTION CO/S4 ,TO BE SURE1 NON-COMMODITY MONEY MAY 
BE EVALUAT$ 9 ACCORDANCE ) ! LABOR CO/S ( COMMODITY MONEY2 BUT ANY 
SU* EVALUATION IS A DELIB]ATE ACT4 ,& S9CE AT PRES5T MONEY 9 MO/ NATIONS 
IS FIAT MONEY1 IT IS CLE> ?AT - AT LEA/ NATIONALLY - MONEY 
POSSESSES PUR*AS+ P[] )\T HAV+ COMMODITY-VALUE4 

,S9CE ! QUE/ = MONEY IS N[ A QUE/ = CAPITAL1 MOD]N MONET>Y 
HI/ORY REFLECTS ! HI/ORY ( CAPITAL =MATION4 ,! MORE EXT5SIVE USE ( 
COMMODITY-MONEY REF]S TO AN E>LI] /AGE ( CAPITALI/IC DEVELOPM5T1 
*>ACT]IZ$ BY A LESS-9TEGRAT$ PRODUCTION & M>KET+ SY/EM4 ,CAPITAL WAS 
LESS CONC5TRAT$ & OP]AT$ LESS R\T9ELY2 ! 9T]VALS BETWE5 PUR*ASES 
& SALES W]E MORE SPORADIC ?AN UND] MOD]N CONDITIONS4 ,PEOPLE PREF]R$ 
METALLIC MONEY NOT ONLY BECAUSE !Y W]E US$ TO IT1 BUT ALSO BECAUSE ! 
ACCUMULATION ( CAPITAL G5]ALLY PRESUPPOS$ ! HO>D+ ( MONEY4 ,MONEY HAD 
TO RETA9 ITS VALUE1 A CONDITION BE/ ASSUR$ BY MA9TA9+ ITS COMMODITY 
=M4 ,BESIDES1 GOLD HAD BE5 ! MONEY /&>D = TOO LONG TO BE EASILY 
DISPLAC$ BY M]E SYMBOLIC MONEY4 ,! CIRCULATION ( GOLD CO9S & ! 
ASSURANCE ?AT PAP] WAS CONV]TIBLE 9TO GOLD SUPPORT$ A G5]AL CONFID5CE 
9 ! /ABILITY ( ! MONET>Y SY/EM & ! VALUE ( CURR5CIES4 

,! E>LY PREF]5CE = COMMODITY-MONEY F\ND ITS 9T]NATIONAL EXT5SION 
& MO/ IMPORTANT RATIONALE 9 ! 0AUTOMATISM0 ( ! GOLD 
/&>D AS ! 0REGULATOR0 ( ! 9T]NATIONAL EX*ANGE ECONOMY4 
,! GOLD /&>D TI$ ! VALUE ( ! V>I\S NATIONAL MONET>Y UNITS ( 
ACC\NT TO !IR GOLD VALUES & TO ONE ANO!R BY FIX+ ! PRICE ( GOLD4 ,A 
DOLL> REPRES5T$ A C]TA9 QUANTITY ( GOLD1 AS DID ! ,BRITI% P\ND & 
O!R GOLD-/&>D CURR5CIES4 ,IF ONE P\ND C\LD BE B\<T = F\R DOLL>S1 
?IS MEANT ?AT ! GOLD CONT5T ( ONE P\ND MAT*$ ?AT ( F\R DOLL>S4 
,ACTUALLY1 ( C\RSE1 ! EX*ANGE ( CURR5CY WAS & IS NOT ?AT CLEAN-CUT1 
S9CE PRICES = DIFF]5T CURR5CIES FLUCTUATE ) ! *ANG+ SUPPLY & 
DEM& ( DIFF]5T CURR5CIES 9 ! =EIGN-EX*ANGE M>KET4 ,BUT !SE 
DIFF]5CES AV]AGE \T OV] TIME 9 ! MULTITUDE ( EX*ANGE TRANSACTIONS4 
,! =EIGN-EX*ANGE M>KET PROVIDES AN 9T]NATIONAL CLE>+ ME*ANISM4 ,S9CE 
DEBITS & CR$ITS BETWE5 NATIONAL CLAIMS MAY NOT BALANCE1 RESIDUAL CLAIMS >E 
SETTL$ BY GOLD %IPM5TS 9 ORD] TO REA* A COMPLETE1 IF TEMPOR>Y1 PAYM5TS 
BALANCE4 

,ONLY P>T ( NEWLY-M9$ GOLD S]VES MONET>Y PURPOSES4 ,ANO!R P>T - 
PROBABLY LESS ?AN HALF ( TOTAL PRODUCTION - S]VES NON-MONET>Y NE$S 
9 ! >TS & 9DU/RY4 ,9 ORD] TO MA9TA9 ! FIX$ PRICE ( GOLD1 ITS 
SUPPLY MU/ NOT EXCE$ ! DEM&2 AS LONG AS ! \TPUT ( GOLD EXCE$S ! 
9DU/RIAL M>KET DEM&1 ! EXCESS MU/ BE B\<T = MONET>Y PURPOSES 
:E!R OR NOT IT IS ACTUALLY NE$$4 ,9 REC5T TIMES1 IT HAS BE5 F\ND 
NECESS>Y TO SELL GOLD ON ! PRIVATE M>KET TO MA9TA9 ITS FIX$ PRICE4 ,A 
/EADILY 9CREAS+ DEM& = GOLD DROVE ! PRICE BEYOND ITS FIX$ LIMIT1 
=C+ ,5GL& & ! ,UNIT$ ,/ATES TO MEET ! DEM& BY SELL+ SOME ( 
!IR MONET>Y GOLD ON ! ,LONDON GOLD-EX*ANGE4 

,LIKE MONEY ITSELF1 ! GOLD /&>D WAS NOT MEANT TO FACILITATE ! 
9T]NATIONAL CIRCULATION ( COMMODITIES 9 ANY PHYSICAL S5SE2 ITS PURPOSE WAS 
TO EXPRESS & SECURE ! PROP]TY CLAIMS ATTA*$ TO ! COMMODITIES & 
CAPITAL 5T]+ ! WORLD M>KET4 ,9T]NATIONAL MONET>Y TRANSACTIONS HAD TO 
BE COV]$ BY COMMODITY MONEY = ?IS WAS ! ONLY REALI/IC =M 9 :I* 
PROP]TY CLAIMS C\LD BE SETTL$4 

,! GOLD /&>D WAS AN AGREEM5T BETWE5 GOV]NM5TS DUR+ LAISSEZ-FAIRE 
CAPITALISM2 AS SU* IT WAS A CONSCI\S 9T]V5TION 9 ! M>KET ME*ANISM4 
,YET IT WAS CONCEIV$ AS A SELF-REGULATORY SY/EM P>ALLEL TO ! 
SELF-REGULATORY M>KET ME*ANISM4 ,NATIONALLY1 ! GOLD /&>D IMPLI$ ?AT 
! C5TRAL BANKS HAD TO KEEP ! VALUE ( !IR MONET>Y UNIT AT P> ) ?AT 
( O!R GOLD-/&>D CURR5CIES BY KEEP+ A SUFFICI5T GOLD RES]VE4 ,! 
MA9T5ANCE ( SU* A RES]VE SET A DEF9ITE LIMIT TO ! CREATION ( 
CR$IT-MONEY4 ,! GOLD /&>D WAS !N AN 9/RUM5T TO CIRCUMSCRIBE ! 
EXPANSION & CONTRACTION ( CR$IT & !RE) ! 9FLATION>Y OR 
DEFLATION>Y T5D5CIES :I* F9D EXPRESSION 9 RIS+ OR FALL+ PRICES4 
,UND] ! RULE ( ! GOLD /&>D1 A DISP>ITY BETWE5 SUPPLY & DEM& 9 
! =EIGN-EX*ANGE M>KET L$ TO A FL[ ( GOLD FROM ONE C\NTRY TO ANO!R3 
GOLD FL[$ TO NATIONS ) A FAVORABLE BALANCE ( TRADE FROM NATIONS ) AN 
UNFAVORABLE BALANCE4 ,IT WAS ASSUM$ ?AT ! DRA9 ( GOLD FROM A P>TICUL> 
C\NTRY W\LD R$UCE ITS ECONOMIC ACTIVITY & ?US LEAD TO DEFLATION & L[] 
PRICES1 :ILE ! 9FLUX ( GOLD 9TO ANO!R C\NTRY W\LD /IMULATE ECONOMIC 
ACTIVITY & ?US LEAD TO 9FLATION & HI<] PRICES4 ,BECAUSE PRICES W\LD BE 
L[ 9 C\NTRIES LOS+ GOLD & HI< 9 C\NTRIES GA9+ GOLD1 TRADE W\LD 
%IFT FROM ! LATT] TO ! =M]4 ,?IS %IFT 9 TRADE W\LD AGA9 REV]SE 
! GOLD MOVEM5TS4 ,IT WAS ?R\< ! EFFECTS ( GOLD MOVEM5TS ON ! LEVEL 
( PRICES ?AT ! GOLD /&>D WAS ADJUDG$ AN 9T]NATIONAL EQUILIBRIUM 
ME*ANISM4 

,AS AN 0EQUILIBRIUM ME*ANISM10 H[EV]1 ! GOLD /&>D WAS AS 
9EFFICI5T AS ! M>KET ITSELF4 ,! ASSUM$ CLOSE CONNECTION BETWE5 GOLD 
/OCKS & DOME/IC PRICES DID NOT EXI/3 PRICES DID NOT FALL OR RISE BECAUSE 
( GOLD MOVEM5TS FROM ONE C\NTRY TO ANO!R4 ,AT TIMES1 SOME NATIONS 
EXP]I5C$ :AT SEEM$ TO BE AN UN5D+LY FAVORABLE BALANCE ( TRADE & 
PAYM5TS1 :ILE O!RS W]E NOT ABLE TO OV]COME UNFAVORABLE BALANCES 
REG>DLESS ( !IR DEFLATION>Y POLICIES4 ,AT ANY RATE1 ! ,FIR/ ,WORLD ,W> 
PRACTICALLY 5D$ ! GOLD /&>D BY 9T]RUPT+ & DISLOCAT+ ! 
9T]NATIONAL CAPITAL & COMMODITY M>KET4 ,GOV]NM5TS BORR[$ & ISSU$ 
MONEY 9 COMPLETE DISREG>D ( !IR GOLD RES]VES4 ,!Y PAID = NECESS>Y 
IMPORTS ) GOLD2 SO GOLD ACCUMULAT$ 9 NATIONS ABLE TO SELL4 ,AFT] ! W>1 
NATIONS LEFT ! GOLD /&>D EI!R BY NECESSITY OR BY DESIGN4 ,BY MEANS ( 
CURR5CY 9FLATION1 GOV]NM5TS RID !MSELVES ( ! 5ORM\S DEBTS !Y HAD 
PIL$ UP DUR+ ! W> & KEPT CONSUMPTION D[N 9 ORD] TO RE-CAPITALIZE 
!IR 9DU/RIES4 ,9 SOME C\NTRIES RUNAWAY 9FLATION F9ALLY ?REAT5$ TO 
DE/ROY ALL ECONOMIC ACTIVITY1 AT :I* PO9T1 ( C\RSE1 GOV]NM5T-DECRE$ 
MONEY RE=MS BR\<T IT TO AN 5D1 ?US PROVID+ ! CIRCULAT+ M$IA ) 
SUFFICI5T /ABILITY TO FUNCTION 9 ! EX*ANGE & CAPITALIZATION PROCESS 
ONCE AGA94 

,IT %\LD BE CLE> ?AT IT IS NOT ! M]E AVAILABILITY ( CR$IT - 
DUE TO ! 9FLUX ( GOLD - :I* 9DUCES NEW 9VE/M5TS & CREATES 
CONDITIONS ( PROSP]ITY1 BUT ! EXPECT$ PR(ITABILITY ( 9VE/M5TS AS 
9DICAT$ BY ! EXI/+ PR(ITABILITY ( CAPITAL4 ,& IT IS NOT ! 
CONTRACTION ( CR$IT - DUE TO AN \TFL[ ( GOLD - :I* ISSUES 
9TO CAPITAL /AGNATION1 BUT A LACK ( PR(ITABILITY ( ! EXI/+ CAPITAL1 
:I* DE/ROYS 9C5TIVES = NEW 9VE/M5TS & !RE) ! DEM& = 
CR$ITS4 

,AN 9CREAS+ CAPITALIZATION ( PRODUCTION 9CREASES ! PRODUCTIVITY ( 
LABOR & !RE) ! COMPETITIVE ABILITY ( AN 5L>G$ CAPITAL4 ,:]E 
CR$IT EXPANSION LEADS TO CAPITAL 9VE/M5TS1 IT ALSO LEADS TO A *EAP5+ ( 
PRODUCTION RELATIVE TO ! PRODUCTION ( C\NTRIES ) A L[] RATE ( CAPITAL 
=MATION4 ,BY BE+ ABLE TO SELL AT L[] PRICES1 ! MORE-PRODUCTIVE C\NTRIES 
9VADE ! M>KETS ( ! LESS-PRODUCTIVE NATIONS4 ,IT IS !RE=E NOT TRUE 
?AT CR$IT EXPANSION MU/ ALWAYS LEAD TO 9FLATION>Y PRICES4 ,) A 
SUFFICI5T 9CREASE ( PRODUCTIVITY ! SUPPLY CAN MAT* & EXCE$ ! DEM& 
& CAN ?US NOT ONLY PREV5T A RISE 9 PRICES BUT EV5 L[] !M4 ,9/EAD ( 
LOS+ GOLD BECAUSE ( ADV]SE TRADE POSITIONS1 RAPIDLY EXP&+ ECONOMIES MAY 
9CREASE !IR GOLD RES]VES & ?US !IR MONEY SUPPLY 9 ACCORDANCE ) 
!IR CR$IT POLICIES4 ,) A DECL9+ PR(ITABILITY ( CAPITAL1 BO? 
9VE/M5TS & CR$IT TRANSACTIONS DECL9E4 ,?IS DOES NOT NECESS>ILY BR+ 
AB\T AN 9CREASE 9 SALES ?R\< =EIGN COMM]CE1 = EV5 ! L[ PRICES ( 
NATIONS ) A CONTRACT+ ECONOMY MAY /ILL BE MAT*$ BY ! PRICES ( 
NATIONS 5JOY+ A HI<] PRODUCTIVITY 9 EXP&+ ECONOMIES4 ,!RE WILL !N 
BE NO 9FLUX ( MONEY FROM ABROAD TO /IMULATE ! ECONOMIC ACTIVITY ( ! 
RELATIVELY /AGNAT+ NATIONS4 

,MOREOV]1 ) ! E/ABLI%M5T ( ! WORLD M>KET ! CONDITIONS ( 
PROSP]ITY1 /AGNATION1 & DEPRESSION BECAME WORLD-WIDE PH5OM5A4 ,:ILE !SE 
CONDITIONS AFFECT$ DIFF]5T NATIONS TO DIFF]5T DEGREES1 NONE REMA9$ 
UNAFFECT$4 ,ALL CAPITALI/ NATIONS T5D$ TO EXP& CR$ITS 9 GOOD TIMES & 
CONTRACT !M 9 BAD4 ,9 ITS CR$IT EXPANSION1 EA* NATION WAS LIMIT$ BY ! 
SIZE ( ITS GOLD RES]VE4 ,9 TIMES ( DEPRESSION !RE WAS NO PRESSURE ON ! 
GOLD RES]VE S9CE DEM& = 9VE/M5T CR$ITS WAS L[4 ,AT SU* TIMES1 
NATIONS W\LD SIMPLY WAIT = A TURN ( EV5TS & 5GAGE 9 AN 9T5SIFI$ 
COMPETITION = M>KETS & GOLD4 

,DESPITE ! GOLD /&>D'S DISAPPO9T+ RESULTS1 ONLY RELUCTANTLY1 
& UND] ! PRESSURE ( ! ,GREAT ,DEPRESSION1 WAS IT F9ALLY ABOLI%$4 ,BUT 
S9CE COMMODITY-MONEY WAS /ILL NECESS>Y = SETTL+ 9T]NATIONAL PAYM5TS 
BALANCES1 AN 9T]NATIONAL GOLD EX*ANGE ME*ANISM WAS SUB/ITUT$4 ,?\< GOLD 
/ILL FL[S BETWE5 NATIONS1 !SE FL[S NE$ NOT AFFECT DOME/IC MONEY 
SUPPLIES4 ,AS GOLD IS N[ REG>D$ SIMPLY AS A SPECIAL K9D ( MONEY1 AS 
9T]NATIONAL MONEY1 GOLD MOVEM5TS NE$ NO LONG] DET]M9E NATIONAL MONET>Y 
POLICIES4 ,9FLATION & DEFLATION RESULT FROM GOV]NM5T DECISIONS TO EXP& OR 
CONTRACT ! MONEY & CR$IT SUPPLY4 ,PRECISELY = ?IS REASON1 SOME ADH]5TS 
( AN UNRE/RICT$ M>KET ECONOMY DI/RU/ ! PRES5T >RANGEM5T & LONG = 
A RETURN TO ! 0AUTOMATISM0 ( ! GOLD /&>D4 

,! FACT ?AT ANY DECL9E 9 ECONOMIC ACTIVITY %[S UP AS A 
MONEY-CONTRACTION GAVE RISE TO ! NOTION ?AT SU* DECL9ES W]E CAUS$ BY 
%ORTAGES ( MONEY & ?AT !SE1 9 TURN1 W]E ! RESULT ( LIMITS SET TO 
CR$IT EXPANSION BY ! RULES ( ! GOLD /&>D4 ,KEYNES1 WE RECALL1 HELD 
?AT ! GOLD /&>D WAS L>GELY RESPONSIBLE = ! CRISIS CONDITIONS :I* 
FOLL[$ ! ,FIR/ ,WORLD ,W>4 ,HE FELT ?AT ! LIB]AL >GUM5T AGA9/ 
M]CANTILISMS AS A SY/EM B\ND TO A S5SELESS ACCUMULATION ( GOLD LO/ ALL 
ITS =CE & MEAN+ BECAUSE IT WAS PRECISELY ! LAISSEZ-FAIRE GOLD 
COMPETITIVE PURSUIT & COMPETITIVE APPETITE = ! PRECI\S METAL4 .<#a.> ,= ) /RICT 
ADH]5CE TO ! GOLD /&>D1 !RE WAS NO 0OR?ODOX MEANS OP5 TO ! 
AU?ORITIES = C\NT]ACT+ UNEMPLOYM5T AT HOME EXCEPT BY !IR /RUGGL+ 
= AN EXPORT SURPLUS & AN IMPORT ( ! MONET>Y METAL AT ! EXP5SE ( 
!IR NEI<BORS10 :I* T5D$ TO CONTRACT BO? DOME/IC M>KET & 
9T]NATIONAL TRADE4 ,KEYNES ADVOCAT$ FREE+ NATIONAL MONEY & CR$IT 
POLICIES FROM ! REQUIREM5TS ( ! 9T]NATIONAL GOLD /&>D4 

,IT IS QUITE OBVI\S1 H[EV]1 ?AT ! EXI/5CE ( ! GOLD /&>D DID 
NOT PREV5T A RA!R RAPID CAPITAL =MATION AT ! TURN ( ! C5TURY2 & IT 
IS EQUALLY OBVI\S ?AT :5 ! GOLD /&>D WAS ABOLI%$1 ! RATE ( 
CAPITAL ACCUMULATION WAS R$UC$ RA!R ?AN HA/5$4 ,CLE>LY1 ! EXPANSION 
& CONTRACTION ( CAPITAL PRODUCTION DID NOT DEP5D ON ! EXI/5CE OR 
NONEXI/5CE ( ! GOLD /&>D4 

,AN ECONOMY ) A GR[+ POPULATION1 GR[+ PRODUCTION & GR[+ 
PRODUCTIVITY WILL HAVE A CONT9U\S 9CREASE 9 ! QUANTITY ( MONEY4 ,?IS 
9CREASE IS MODIFI$ BY ! APPLICATION ( NON-MONET>Y =MS ( EX*ANGE & 
BY ! DECL9E ( ! LEVEL ( PRICES DUE TO ! 9CREAS+ PRODUCTIVITY ( 
LABOR4 ,! DEVELOPM5T ( ! BANK+ & CR$IT SY/EM WAS A P[]FUL MEANS 
= SPE$+ UP ! CAPITAL =MATION PROCESS4 ,NOT ONLY W]E WIDELY-DISP]S$ 
MONEY HAD RES\RCES C5TRALIZ$ 9 L>GE MONEY POOLS1 BUT UND] ! FRACTIONAL 
RES]VE SY/EM !SE POOLS PROVID$ A WIDE BASE = A MULTIPLE CR$IT 
EXPANSION4 ,& :ILE CR$IT ALL[$ = AN ACCEL]AT$ EXT5SION ( 9DU/RIAL 
& COMM]CIAL ACTIVITIES1 ! EXPANSION ( PRODUCTION ?US FO/]$ ALL[$ 
=1 & DEM&$1 FUR!R EXT5SIONS ( ! CR$IT SY/EM4 ,?IS RECIPROCAL 
PROCESS IMPLI$ A /EADY DISPLACEM5T ( COMMODITY-MONEY BY CR$IT-MONEY4 

,H[EV]1 IF BANKS C\LD CREATE CR$IT AT WILL1 ! VALUE ( MONEY W\LD SOON 
BE LO/4 ,:5 ! MONEY SUPPLY IS LIMIT$1 SO IS ! EXT5SION ( CR$IT4 ,& 
) ! SUPPLY ( GOLD LIMIT$1 ! SUPPLY ( MONEY & CR$IT WAS ALSO 
LIMIT$4 ,CUTT+ LOOSE FROM GOLD FRE$ ! WAY = AN 9DEP5D5T NATIONAL 
MONEY POLICY DESIGN$ TO 5HANCE ECONOMIC ACTIVITY ?R\< CR$IT EXPANSION1 
9FLATION1 & DEFICIT-F9ANC+4 

,:ILE !RE IS G5]AL AGREEM5T ?AT ! VALUE ( MONEY IS MEASUR$ BY ITS 
PUR*AS+ P[]1 DIFF]5T NOTIONS PREVAIL REG>D+ ! FACTORS ?AT ALT] 
?IS P[]4 ,MO/ POPUL> WAS ! IDEA ?AT *ANGES 9 ! VOLUME ( MONEY W\LD 
LEAD TO ALT]ATIONS 9 ! G5]AL PRICE LEVEL4 ,?IS WAS AN APPLICATION ( ! 
SUPPLY-&-DEM& !ORY ( PRICES TO MONET>Y !ORY3 QUANTITIES ( MONEY W]E 
CONTRA/$ ) QUANTITIES ( COMMODITIES4 ,! QUANTITY !ORY ( MONEY 
9CLUDES ! PR9CIPLE ( VELOCITY1 ?AT IS1 ?AT ! SAME UNIT ( MONEY 
FUNCTIONS 9 MORE ?AN ONE EX*ANGE TRANS ACTION4 ,ASIDE FROM ! HI/ORICAL 
FACT ?AT AN EXP&+ ECONOMY ALSO EXP&S ITS MONEY SUPPLY1 ! VELOCITY ( 
MONEY V>IES ) ! 9CREASE OR DECREASE ( ECONOMIC ACTIVITY4 ,IF !RE IS A 
D[NW>D TR5D 9 ! CIRCUIT VELOCITY ( MONEY ?IS 9DICATES REAL M>KET 
DI/URBANCES RA!R ?AN MONET>Y DIFFICULTIES1 EV5 ?\< SU* A TR5D WILL 
9T5SIFY !SE DI/URBANCES ON ITS [N ACC\NT4 

,9 ! QUANTITY !ORY ( MONEY1 MONEY APPE>S AS AN 9DEP5D5T ECONOMIC 
=CE DET]M9+ ! EXPANSION & CONTRACTION ( BUS9ESS ACTIVITIES1 ! 
RISE & FALL ( PRICES1 & ! 9CREASE & DECREASE ( 9COME4 ,ACTUALLY1 ! 
GR[? ( PRODUCTION & 9COMES DOES NOT DEP5D ON ! PRES5CE ( ANY 
DEF9ITE AM\NT ( MONEY2 MORE MONEY OR LESS MAY EXP& ! SCALES ( 
PRODUCTION & 9COME4 ,MOREOV]1 PRICES >E NOT HI< OR L[ BECAUSE MORE OR 
LESS MONEY CIRCULATES1 BUT MORE OR LESS MONEY CIRCULATES BECAUSE PRICES >E 
EI!R HI< OR L[4 ,IT IS CLE> ?AT IF ALL PRICES %\LD SUDD5LY D\BLE1 ! 
EXI/+ MONEY SUPPLY MU/ ALSO BE D\BL$1 = O!RWISE HALF ( ! 
CIRCULAT+ COMMODITIES C\LD NOT BE SOLD4 ,& IF ALL PRICES %\LD SUDD5LY 
FALL BY HALF1 ONLY HALF ( ! EXI/+ MONEY SUPPLY W\LD BE REQUIR$ TO CLE> 
! M>KET4 ,BUT D\BL+ ! MONEY SUPPLY WILL NOT D\BLE1 NOR HALV+ IT 
R$UCE1 ! VOLUME OR VALUE ( COMMODITIES4 ,! PRICES ( COMMODITIES & 
S]VICES1 ?\< EXPRESS$ 9 MONEY T]MS1 >E NOT DET]M9$ BY BUT DET]M9E 
! QUANTITY & VELOCITY ( MONEY4 

,IT IS ( C\RSE TRUE ?AT IF MONEY W]E COMMODITY-MONEY 7E4G41 GOLD7 
EXCLUSIVELY2 ITS BUY+-P[] W\LD V>Y LIKE O!R COMMODITY PRICES4 ,A SMALL] 
OR L>G] QUANTITY ( MONEY W\LD EX*ANGE ) L>G] OR SMALL] QUANTITIES ( 
O!R COMMODITIES4 ,A %ORTAGE ( MONEY W\LD RAISE ITS VALUE RELATIVE TO O!R 
COMMODITIES1 :I* W\LD 9DUCE 9CREAS$ GOLD PRODUCTION - & ?IS1 9 
TURN1 W\LD 5D ! MONEY %ORTAGE4 ,IF GOLD PRODUCTION C\LD NOT BE 9CREAS$1 
?IS W\LD M]ELY MEAN ?AT FEW] QUANTITIES ( GOLD W\LD HAVE TO GIVE 
EXPRESSION TO L>G] QUANTITIES ( O!R COMMODITIES4 ,H[EV]1 ! PRICE ( 
GOLD IS FIX$ & MONEY1 :I* WAS BAS$ ON GOLD SOLELY TO ! EXT5T ( ! 
FRACTIONAL GOLD RES]VE1 IS AT PRES5T 5TIRELY FRE$ FROM ITS GOLD CONNECTION4 
,UND] !SE CONDITIONS1 9CREAS+ ! QUANTITY ( MONEY BEYOND ! EXT5T ( 
ITS 0NORMAL0 GR[? )9 ! RIS+ M>KET TRANSACTIONS W\LD 
ONLY MEAN TO *ANGE ! MONEY EXPRESSION ( CON/ANT COMMODITY-VALUES4 ,ASSUM+ 
AN 09FLATION>Y0 SITUATION 9 :I* ALL PRICES RISE1 ALL 
COMMODITIES W\LD HAVE HI<] NUMB]S ON !IR PRICE-TAGS1 BUT O!RWISE 
NO?+ W\LD BE ALT]$4 ,!RE W\LD BE NO PO9T 9 9CREAS+ ! QUANTITY ( 
MONEY4 

,H[EV]1 IF SOME PRICES %\LD RISE FA/] ?AN O!RS UND] 9FLATION>Y 
CONDITIONS1 A SITUATION ( ADVANTAGES & DISADVANTAGES WILL >ISE4 ,TO BE SURE1 
SOME COMMODITY PRICES ALWAYS FALL OR RISE RELATIVE TO O!RS BECAUSE ( ! 
EFFECTS ( 9CREAS+ PRODUCTIVITY1 OR BECAUSE ( *ANGES 9 ! COMPETITIVE 
M>KET SITUATION4 ,SU* REGUL> PRICE *ANGES DO NOT REF] TO 9FLATION>Y OR 
DEFLATION>Y CONDITIONS1 :I* AFFECT ! G5]AL PRICE LEVEL RA!R ?AN 
P>TICUL> COMMODITY PRICES4 

,AL?\< 9FLATION AFFECTS ! G5]AL PRICE LEVEL1 ! PRICE ( SOME 
COMMODITIES *ANGES MORE ?AN O!RS4 ,WAGES1 = 9/ANCE1 RISE LESS UND] 
9FLATION ?AN DO ! PRICES ( O!R COMMODITIES4 ,AS WAGES =M P>T ( ! 
PRICES ( COMMODITIES 5T]+ ! M>KET1 A RISE 9 WAGES DUE TO 9FLATION CAN 
BE COMP5SAT$ = 9 ?IS PRICE4 ,! PRICES ( COMMODITIES >E SET AFT] ! 
LABOR CO/S 9CORPORAT$ 9 !M HAVE BE5 SETTL$ OR PAID4 ,A RISE 9 ! CO/ 
( LABOR1 !RE=E1 CANNOT PREV5T A /ILL FA/] RISE 9 ! PRICES ( 
COMMODITIES2 SO ?AT1 RELATIVE TO ! COMMODITIES IT PRODUCES1 ! CO/ ( 
LABOR P[] W\LD HAVE BE5 R$UC$4 

,9 ?IS WAY1 G5]AL 9FLATION CAN RAISE P>TICUL> PRICES AT ! EXP5SE ( 
O!RS4 ,BUT ! 9CREASE OR DECREASE ( MONEY 9FLU5CES ECONOMIC ACTIVITY ONLY 
BY CREAT+ *ANGES 9 ! DI/RIBUTION ( 9COME4 ,BECAUSE WAGES >E MORE 
SLUGGI% 9 !IR MOVEM5TS ?AN COMMODITY PRICES1 9FLATION LEADS TO HI<] 
PR(ITS & !RE)1 TO A MORE RAPID TURNOV] ( GOODS & A HI<] RATE ( 
CAPITAL =MATION4 ,9S(> AS ?IS KEEPS UP ! LEVEL ( EMPLOYM5T1 9FLATION 
APPE>S PREF]ABLE EV5 TO ! WORK]S1 = DEFLATION MAY MEAN L>GE-SCALE 
UNEMPLOYM5T4 ,9FLATION DOES NOT SUIT ALL CAPITALI/S1 NOR DOES IT SUIT ?OSE 
SOCIAL LAY]S :O LIVE ON FIX$ 9COMES & ?US SUFF] :5 PRICES 9CREASE4 
,!RE >E1 !N1 SOCIAL GR\PS 9T]E/$ 9 9FLATION & O!RS OPPOS$ TO 
IT1 & !SE GR\PS WAGE POLITICAL /RUGGLES = EI!R ONE OR ! O!R 
MONET>Y POLICY4 

,9FLATION IS USUALLY DEF9$ AS A CONDITION 9 :I* ! MONEY 9COME RISES 
FA/] ?AN ! REAL 9COME1 I4E41 :]E !RE IS TOO MU* MONEY RELATIVE TO 
! AVAILABLE GOODS4 ,UND] CONDITIONS ( FULL EMPLOYM5T1 IT IS SAID1 9FLATION 
OCCURS :5 EXP5DITURES = GOODS & S]VICES GR[ FA/] ?AN POT5TIAL 
\TPUT4 ,ON ?IS ASSUMPTION1 9FLATION CAN BE /OPP$ EI!R DELIB]ATELY OR 
AUTOMATICALLY - DELIB]ATELY1 BY ! CONSCI\S CONTRACTION ( ! MONEY 
SUPPLY ON ! P>T ( ! MONET>Y AU?ORITIES1 & AUTOMATICALLY1 BECAUSE 
ACCORD+ TO B\RGEOIS !ORY ! 9CREAS+ DEM& = MONEY RAISES ! RATE 
( 9T]E/1 :I* 9 TURN DECEL]ATES ! EXPANSION PROCESS4 

,IT IS QUITE CLE> ?AT PRICES WILL RISE ) A %ORTAGE ( COMMODITIES & 
FALL :5 !RE IS A GLUT ON ! M>KET1 :ATEV] ! MONEY SUPPLY MAY BE4 ,) 
GIV5 9COMES1 ?IS M]ELY MEANS ?AT PEOPLE WILL BE ABLE TO BUY LESS AT SOME 
TIMES & MORE AT O!R TIMES4 ,:AT SOME LOSE !REBY O!RS WILL GA94 ,! 
SOCIAL DEM& CAN BE SMALL] ?AN ! SOCIAL SUPPLY1 BUT1 EXCEPT AS A M]E 
DESIRE1 IT CANNOT BE L>G]1 = :AT IS NOT !RE CAN BE NEI!R B\<T NOR 
SOLD4 ,AN 9JECTION ( MONEY UND] CONDITIONS ( A LIMIT$ SUPPLY CANNOT 
9CREASE ! ACTUAL DEM&2 IT M]ELY 9CREASES ! PRICES ( ! AVAILABLE 
COMMODITIES4 ,! SUPPLY CAN BE 9CREAS$ ONLY ?R\< ADDITIONAL PRODUCTION2 
& ?IS DEP5DS NOT ON ! QUANTITY ( MONEY BUT ON ! PR(ITABILITY ( 
CAPITAL4 

,9 FACT1 MONET>Y AU?ORITIES DET]M9E ! QUANTITY ( MONEY BY !IR 
DECISIONS1 M$IAT$ ?R\< ! BANKS1 TO MAKE MONEY AVAILABLE = LOANS & 
9VE/M5TS4 ,! SUPPLY ( MONEY IS A MATT] ( POLICY & NOT ! UNWILL$ 
RESULT ( UNCONTROLL$ ECONOMIC EV5TS3 ECONOMIC DIFFICULTIES MAY BE RESOLV$ 
BY DEFLATION>Y OR 9FLATION>Y MEANS4 ,BO? !SE MEANS CON=M TO CAPITALI/IC 
PR9CIPLES2 IF AT A GIV5 TIME ONE IS *OS5 9/EAD ( ! O!R1 IT IS 
BECAUSE IT APPE>S TO BE MORE EFFECTIVE & POLITICALLY MORE VIABLE4 

,A P]IOD ( EXT5SIVE CAPITAL =MATION NE$ NOT BE 9FLATION>Y :5 
SU/A9$ BY A SUFFICI5T PR(ITABILITY BAS$ ON AN 9CREAS+ PRODUCTIVITY4 
,LIKEWISE1 A P]IOD ( ECONOMIC /AGNATION IS NOT NECESS>ILY DEFLATION>Y4 ,IT 
USUALLY IS SO1 H[EV]1 BECAUSE ! PREC$+ /AGE ( EXPANSION LEAVES A MASS 
( CAPITAL & PRODUCTIVE CAPACITY TOO L>GE = O!R ?AN CONDITIONS ( 
ACCEL]AT$ CAPITAL EXPANSION4 ,! EXCESS RESULTS 9 IDLE CAPACITY & IDLE 
WORK]S2 PRICES COLLAPSE ?R\< 9T5SIFI$ COMPETITION2 & ! :OLE SY/EM 
CONTRACTS4 ,DUR+ A P]IOD ( RETR5*M5T ! SY/EM SL[LY RE/RUCTURES 
ITSELF UNTIL CONDITIONS ( PR(ITABLE CAPITAL EXPANSION >E RE/OR$4 ,BECAUSE 
9VE/M5TS DECL9E 7OR CEASE ALTOGE!R7 DUR+ P]IODS ( DEPRESSION1 !RE 
>E NOT ONLY IDLE RES\RCES BUT ALSO IDLE MONEY1 I4E41 MONEY UNABLE TO F9D 
PR(ITABLE EMPLOYM5T4 ,P>ADOXICALLY1 IT IS ?IS IDLE MONEY 7& CR$IT7 :I* 
PROVIDES ! SURFACE IMPRESSION ( A G5]AL MONEY %ORTAGE4 ,SU* A SITUATION 
DOES NOT CALL = ADDITIONAL MONEY1 BUT = ! RE/ORATION ( PR(ITABILITY 
:I* WILL /R5G!N ! 9DUCEM5T TO 9VE/4 

,9FLATION RESULTS FROM MONET>Y POLICIES DESIGN$ TO IMPROVE ! 
PR(ITABILITY ( CAPITAL 9T]NALLY & SO 5HANCE ITS COMPETITIVE CAPACITY 
EXT]NALLY4 ,DEFLATION1 :I* CAN HAVE ! SAME EFFECT1 WAS ! ME?OD MO/ US$ 
9 ! PA/ TO OV]COME CRISIS CONDITIONS4 ,IT WAS NOT SO MU* SUBMISSION TO ! 
RULES ( ! GOLD /&>D :I* CONTRACT$ ! ECONOMY AS IT WAS ! 
DEFLATION>Y PROCESS ITSELF :I* UPHELD ! RULES ( ! GOLD /&>D4 ,9 
O!R WORDS1 IT WAS ! PR9CIPLE ( LAISSEZ-FAIRE1 ( NON9T]V5TION 9 ! 
ECONOMY1 & RELIANCE ON 0AUTOMATIC SOLUTIONS0 = BUS9ESS SLUMPS1 
:I* EXPLA9 ! E>LI] PREF]5CE = NON-MONET>Y MEANS TO COMBAT A /ATE 
( DECREAS+ PR(ITABILITY4 ,NOT MONEY1 BUT CAPITAL ITSELF WAS DEVALUAT$ & 
DE/ROY$1 9 ORD] TO MAKE ROOM = A MORE CONC5TRAT$ & MORE PRODUCTIVE 
CAPITAL /RUCTURE4 ,REAL WAGES W]E CUT )\T MU* CONC]N = SOCIAL 
CONSEQU5CES4 

,BUT DEPRESSIONS LO/ !IR 0CURATIVE0 P[]1 OR AT ANY RATE1 
BECAME 9TOL]ABLE4 ,UND] TW5TIE?-C5TURY CONDITIONS ! DEFLATION>Y PROCESS 
( 0RECOV]Y0 BECAME 9CREAS+LY MORE UNT5ABLE BECAUSE ( ! 
SOCIAL CONVULSIONS IT T5D$ TO RELEASE4 ,9FLATION BECAME ! PREF]R$1 IF NOT 
UNAVOIDABLE1 WAY TO REACT TO DEPRESSIONS & TO MA9TA9 LEVELS ( ECONOMIC 
ACTIVITY CONSI/5T ) SOCIAL /ABILITY4 ,9FLATION ( V>Y+ 9T5SITY IS 
N[ RESORT$ TO UND] CONDITIONS ( FULL EMPLOYM5T AS WELL AS ( UNEMPLOYM5T 
- UND] CONDITIONS ( /AGNATION AS WELL AS ( EXPANSION4 ,! 
DEPRECIATION ( MONEY HAS BE5 CONSI/5T & UNIV]SAL1 ?\< ! RATE ( 
DEPRECIATION HAS V>I$1 (T5 WIDELY1 = DIFF]5T NATIONS4 ,:5 PRICES RISE 
FA/] ?AN 9COME DE/9$ = CONSUMPTION 7P>TICUL>LY WAGES71 A GREAT] 
P>T ( TOTAL PRODUCTION CAN BE TURN$ 9TO ADDITIONAL CAPITAL4 ,:ILE PEOPLE 
)\T CAPITAL >E VICTIMIZ$ BY ! DEPRECIATION ( MONEY1 ! [N]S ( 
CAPITAL PRES]VE & AUGM5T !IRS BY ! SAME PROCESS1 PROVID$1 ( C\RSE1 
!Y >E ABLE TO REALIZE !IR PR(ITS ?R\< M>KET SALES4 ,BUT ONE GOOD ?+ 
MAY LEAD TO ANO!R3 PR(IT REALIZATION IS ITSELF 5HANC$ BY ! 9FLATION>Y 
PROCESS4 ,DEPRECIAT+ MONEY IS MORE RAPIDLY SP5T ?AN /ABLE MONEY4 

,! DEPRECIATION ( A NATIONAL CURR5CY MAKES CAPITAL NOT ONLY MORE 
PR(ITABLE BUT ALSO MORE COMPETITIVE 9T]NATIONALLY4 ,H[EV]1 AS ! P[] TO 
DEVALUATE IS GIV5 TO ALL 9DEP5D5T NATIONS1 ! DEVALUATION ( MONEY 9 SOME 
C\NTRIES LEADS TO DEVALUATION 9 O!RS4 ,9 ! 5D1 IT WILL AGA9 BE ! REAL 
CAPITAL /RUCTURE1 & NOT ! MONEY /RUCTURE1 :I* DET]M9ES ! RELATIVE 
COMPETITIVE CAPACITIES ( DIFF]5T NATIONS4 

,?R\< GOV]NM5T PUR*ASES ) BORR[$ MONEY ! PUBLIC DEBT IS 
MONETIZ$ &1 ) ! EXCEPTION ( ?AT P>T ( ! MONETIZ$ DEBT :I* MAY 
BE HO>D$1 9CREASES ! SOCIAL DEM&4 ,! PROCESS ( DEBT-F9ANC+ HAS BE5 
AN 9FLATION>Y PROCESS 9 BO? ,EUROPE & ,AM]ICA4 ,! PUR*AS+ P[] ( ! 
,AM]ICAN DOLL> DECL9$ BY MORE ?AN A ?IRD 9 ! FIR/ TWELVE PO/W> 
YE>S1 & TO ?AT EXT5T DEPRIV$ LONG-T]M L5D]S ( P>T ( !IR 9T]E/ 
& P>T ( !IR PR9CIPAL4 ,IT DEPRIV$ ALL PEOPLE ) MORE OR LESS FIX$ 
9COMES ( P>T ( !IR 9COME4 ,?IS LOSS CAN H>DLY BE (FSET BY WAGE 
9CREASES1 UNLESS WAGE RATES >E BAS$ ON1 & ACTUALLY MOVE )1 A 
CO/-(-LIV+ 9DEX1 :I* IS RA!R ! EXCEPTION ?AN ! RULE4 ,MONET>Y 
9FLATION HAS BE5 9/ITUTIONALIZ$ & 0HAS BECOME SUBJECT TO AN 
9/ITUTIONALIZ$ OP]ATION ( CONTROL BY ! GOV]NM5T & ALL RECEIV]S ( 
PRIVATE 9COME1 AMONG :OM ! F9ANCIALLY POT5T PRIVATE 5T]PRISES MA9TA9 
A PRIVILEG$ POSITION40.<#b.> ,9FLATION IS !N ANO!R =M ( SUBSIDIZATION ( 
BIG BUS9ESS BY GOV]NM5T4 ,IT IS M]ELY ONE ( ! TE*NIQUES BY :I* 9COME 
IS TRANSF]R$ FROM ! MASS ( ! POPULATION 9TO ! H&S ( 
GOV]NM5T-FAVOR$ CORPORATIONS4 

,GOV]NM5T 9T]V5TION 9 ! M>KET ECONOMY IS MO/ PRON\NC$ 9 TIMES ( 
W>4 ,9FLATION IS US$ TO R$UCE CONSUMPTION BY R$UC+ ! BUY+-P[] ( 
MONEY1 SO ?AT A GREAT] P>T ( TOTAL PRODUCTION MAY BE FRE$ = ! W> 
EF=T4 ,IT IS NOT MU* DIFF]5T 9 TIMES ( 0PEACE10 :5 A GREAT 
AM\NT ( GOV]NM5T-9DUC$ PRODUCTION IS NE$$ TO COMP5SATE = A DECL9+ 
RATE ( PRIVATE CAPITAL =MATION4 ,! SUB/ITUTION ( GOV]NM5T-9DUC$ 
DEM& = AN 9ADEQUATE M>KET DEM& HAS BE5 AN 9FLATION>Y PROCESS4 ,?IS 
OBVI\SLY CONTRADICTS ! NOTION ?AT 9FLATION RESULTS FROM ! EXI/5CE ( 
TOO MU* MONEY RELATIVE TO ! AVAILABLE COMMODITY SUPPLY4 ,9 AN ECONOMY 
REQUIR+ GOV]NM5T-9DUC$ DEM&1 ! M>KET DEM& C\LD NOT POSSIBLY 
EXCE$ ! SUPPLY4 

,9FLATION HAS DIFF]5T EFFECTS :5 IT IS US$ TO 5HANCE ! EXPANSION ( 
CAPITAL & :5 IT IS US$ MA9LY TO F9ANCE GOV]NM5T-9DUC$ PRODUCTION4 ,9 
! FIR/ CASE1 IT DI/RIBUTES 9COME 9 A WAY CONDUCIVE TO CAPITAL =MATION2 
9 ! SECOND1 IT SU/A9S ! EXP5SES ( GOV]NM5T-9DUC$ PRODUCTION4 ,IT IS 
G5]ALLY ASSUM$ ?AT GOV]NM5T SP5D+ 9 A FULL EMPLOYM5T SITUATION WILL 
HAVE 9FLATION>Y EFFECTS BECAUSE IT 9CREASES ! AM\NT ( MONEY RELATIVE TO 
! ACTUAL MASS ( PRODUC$ COMMODITIES4 ,?IS W\LD NOT BE SO UND] CONDITIONS 
( UNEMPLOYM5T & UNUS$ RES\RCES1 IT IS SAID1 BECAUSE GOV]NM5T SP5D+ 
W\LD !N 5 L>GE ! 9SUFFICI5T DEM& )\T PRESS+ ON ! SUPPLY4 
,UND] SU* CONDITIONS1 GOV]NM5T SP5D+ NE$ NOT BE 9FLATION>Y4 ,BUT AS 
!RE W\LD BE NO NE$ = COMP5SATORY GOV]NM5T-SP5D+ 9 A FULL 
EMPLOYM5T SITUATION1 WE NE$ NOT CONSID] ! FIR/ CASE4 ,AS TO ! SECOND1 
! >GUM5T CLE>LY RE/S ON A MISUND]/&+ ( ! *>ACT] ( ! 
CAPITALI/ ECONOMY4 

,AL?\< GOV]NM5TS CAN CREATE NEW MONEY AT WILL1 !Y DO SO )9 ! 
FRAMEWORK ( ! PRIVATE 5T]PRISE ECONOMY4 ,! C5TRAL BANKS >E AG5CIES 
GOV]NM5TS USE TO MANUFACTURE & CONTROL ! MONEY SUPPLY4 ,!Y CAN ALT] ! 
DEPOSIT-CREAT+ P[]S ( ! COMM]CIAL BANKS BY *ANG+ ! DISC\NT RATE 
7I4E41 ! RATE ( 9T]E/ AT :I* ! C5TRAL BANK L5DS MONEY TO ! 
COMM]CIAL BANKS71 BY *ANG+ ! LEGAL RES]VE RATIO = DEPOSIT MONEY1 & 
BY BUY+ & SELL+ GOV]NM5T BONDS ON ! CAPITAL M>KET4 ,IT IS ! BANK+ 
SY/EM AS A :OLE :I* CREATES ADDITIONAL MEANS ( PAYM5T ?R\< AN 9CREASE 
9 RES]VES AS DET]M9$ BY ! MONET>Y ACTIONS ( ! C5TRAL BANKS4 ,BANKS 
>E ?US BO? BUS9ESSES & SOCIAL 9/ITUTIONS = ! CREATION & 
ALLOCATION ( MONEY4 ,!Y >E 9 ! =TUNATE POSITION ( PR(IT+ BO? AS 
BUS9ESS 5T]PRISES & AS ! DELEGAT$ 9/RUM5TS ( MONET>Y POLICIES4 
,!Y DRAW PR(ITS & 9T]E/S NOT ONLY FROM ! MONEY DEPOSIT$ ) !M1 
BUT ALSO FROM ! MULTIPLE AM\NTS CREAT$ BY ! FRACTIONAL RES]VE SY/EM & 
! GR[? ( RES]VES BY ! MONEY-CREAT+ PRACTICES ( ! C5TRAL 
BANKS4 

,AL?\< IT IS ! GOV]NM5T :I* 9CREASES ! MONEY SUPPLY1 IT DOES NOT 
USE ?IS MONEY DIRECTLY TO 9CREASE ! M>KET DEM& ?R\< GOV]NM5T 
PUR*ASES4 ,IT F9ANCES ITS EXP5DITURES \T ( TAXES & BORR[+S ON ! 
CAPITAL M>KET4 ,AS F> AS ! PRIVATE CONTRACTORS ( GOV]NM5T ORD]S >E 
CONC]N$1 ! GOV]NM5T-CREAT$ DEM& IS AS GOOD AS ANY O!R4 ,! 
GOV]NM5T PAYS !M MONEY :I* MU/ RETA9 ITS VALUE LONG 5\< = ! 
PRIVATE CONTRACTORS TO REGA9 ! VALUE EXP5D$ 9 ! PRODUCTION ( 
GOV]NM5T ORD]S & MAKE ! CU/OM>Y PR(ITS4 ,IF !IR RETURNS W]E LESS 
?AN !IR EXP5DITURES BECAUSE ( A TOO RAPID DEVALUATION ( MONEY1 !Y W\LD 
F9D !MSELVES 9 A /ATE ( DIS9VE/M5T4 ,9FLATION MU/ !RE=E BE A 
CONTROLL$ 9FLATION2 & IT IS CONTROLL$ BECAUSE IT IS BAS$ NOT ON ! 
GOV]NM5T PR9T+ PRESSES BUT ON GOV]NM5T BORR[+S RE/RICT$ BY LEGALLY 
SET LIMITS TO ! 9CREASE ( ! NATIONAL DEBT4 

,IDLE MONEY & NEWLY-CREAT$ MONEY >E *ANNEL$ ?R\< ! BANK+ SY/EM 
9TO 9DU/RIAL PRODUCTION TO GOV]NM5T ACC\NT4 ,BUT ! L>GE BULK ( ! 
PRODUCTS ?US BR\<T =? >E NEI!R CAPITALIZ$ NEW MEANS ( PRODUCTION NOR 
ADDITIONAL M>KETABLE COMMODITIES2 !Y APPE> AS MAT]IALIZ$ EXP5SES ( 
GOV]NM5T & AS SU* R$UCE ! TOTAL MASS ( PRIVATE PR(IT RELATIVE TO ! 
TOTAL MASS ( ! EXI/+ CAPITAL4 ,PRICES >E !N RAIS$ TO SECURE ! 
CU/OM>Y PR(ITS1 & ! 9CREASE 9 PRICES NECESSITATES ADDITIONAL MONEY4 
,)\T ?IS ADDITIONAL MONEY ! FALL ( ! AV]AGE RATE ( PR(IT1 CLUE TO 
! 9CREASE ( NON-PR(ITABLE GOV]NM5T 9DUC$ PRODUCTION1 W\LD LEAD TO A 
FUR!R DECL9E ( PRIVATE CAPITAL PRODUCTION2 IT W\LD ?US 9 SOME MEASURE1 
& POSSIBLY DECISIVELY1 UNDO ! 9CREASE ( ECONOMIC ACTIVITY ?R\< 
GOV]NM5T-9DUC$ DEM&4 ,IT IS !N NECESS>Y TO ALL[ = A CONT9U\S 
9CREASE 9 PRICES BY A CONT9U\S 9CREASE 9 ! MONEY SUPPLY4 ,IT IS NOT1 AS 
HAS BE5 ASSUM$1 ! PRESSURE ( AN 9CREAS$ DEM& ON A SUPPLY CAUS$ BY 
GOV]NM5T-9DUC$ PRODUCTION :I* LEADS TO 9FLATION4 ,RA!R1 9FLATION IS 
! MEANS BY :I* ! NON-PR(ITABLE *>ACT] ( GOV]NM5T-9DUC$ 
PRODUCTION BY WAY ( DEFICIT-F9ANC+ F9DS ITS P>TIAL COMP5SATION 9 HI<] 
PRICES4 

0,NORMALLY10 CAPITAL =MATION 9DICATES A RESIDUAL SURPLUS ( 
TOTAL PRODUCTION AFT] ! REQUIREM5TS ( TOTAL CONSUMPTION HAVE BE5 MET4 
,ACCUMULATION CONSI/S ( ADD$ CAPITAL-PRODUC+ MEANS ( PRODUCTION4 ,?IS 
OCCURS 9 DECREAS+ MEASURE :5 TOTAL PRODUCTION 9CORPORATES AN 9CREAS+LY 
L>G] %>E ( PRODUCTS :I* CANNOT S]VE AS CAPITAL-PRODUC+ 9/RUM5TS ( 
PRODUCTION4 ,TOTAL PRODUCTION1 :ATEV] ITS *>ACT]1 IS 
0M>KETABLE10 EI!R 9 ! ACTUAL COMMODITY-M>KET OR ?R\< 
GOV]NM5T PUR*ASES2 BUT P>T ( ! MONEY REALIZ$1 :I* %\LD TAKE ON ! 
=M ( CAPITAL1 DOES NOT DO SO4 ,& ?IS IS BECAUSE P>T ( ! EXI/+ 
NON-CONSUMPTION DEM& IS A DEM& NOT = PR(IT-PRODUC+ CAPITAL1 BUT = 
GOV]NM5T PUR*ASES :I* DO NOT 9CLUDE PRODUCTIVE CAPITAL1 OR DO SO ONLY 
9CID5TALLY4 ,AL?\< ! TOTAL SUPPLY MAY MAT* ! TOTAL DEM&1 ! RATE ( 
CAPITAL =MATION DECL9ES4 

,NONE!LESS1 AL?\< ACCOMPANI$ BY A L[ OR /AGNAT+ RATE ( PRIVATE 
CAPITAL =MATION1 ! 9CREASE 9 PRODUCTION ITSELF MAY BE =MIDABLE4 ,?US 
! ECONOMY MAY APPE> QUITE PROSP]\S4 ,! FACT REMA9S1 H[EV]1 ?AT 
PRIVATE CAPITAL =MATION F9DS ITSELF 9 A SEEM+LY 9SOLUBLE CRISIS2 OR1 
RA!R1 ?AT ! CRISIS ( CAPITAL PRODUCTION :I* *>ACT]IZES ! TW5TIE? 
C5TURY HAS NOT AS YET BE5 SOLV$4 ,:5 VIEW$ FROM ! P]SPECTIVE ( PR(IT 
PRODUCTION1 ! PRES5T DIFF]S FROM ! PA/ 9 ?AT DEFLATION>Y DEPRESSION 
CONDITIONS HAVE BE5 SUPPLANT$ BY 9FLATION>Y DEPRESSION CONDITIONS4 ,9 A 
DEFLATION>Y DEPRESSION1 PRODUCTION DECL9ES BECAUSE P>T ( ! PRODUCIBLE 
COMMODITIES CANNOT BE SOLD PR(ITABLY1 ?US PREV5T+ ! REALIZATION ( 
PR(ITS & !IR TRANS=MATION 9TO ADDITIONAL CAPITAL2 :]EAS 9 AN 
9FLATION>Y DEPRESSION PRODUCTION CONT9UES1 DESPITE ITS LACK ( 
PR(ITABILITY1 BY WAY ( CR$IT EXPANSION4 

,CONTROLL$ 9FLATION IS ALREADY ! CONT9U\S1 IF SL[1 REPUDIATION ( ALL 
DEBTS1 9CLUD+ ! NATIONAL DEBT4 ,IT SPREADS ! EXP5SE ( NON-PR(ITABLE 
GOV]NM5T-9DUC$ PRODUCTION OV] A LONG P]IOD ( TIME & OV] ! :OLE ( 
SOCIETY4 ,AL?\< GOV]NM5T-9DUC$ PRODUCTION 9CREASES ! SCOPE ( 
PRODUCTION1 IT CAN NOT 9CREASE ! PR(ITABILITY ( PRIVATE CAPITAL AS A :OLE 
& ?US RE/ORE = IT A RATE ( GR[? ?AT W\LD MAKE A COMP5SATORY 
GOV]NM5T-CREAT$ DEM& UNNECESS>Y4 ,CAPITALI/ PR(ITS CAN BE 9CREAS$ ONLY 
BY 9CREAS$ PRODUCTIVITY & AN 9CREAS+ QUANTITY ( CAPITAL CAPABLE ( 
FUNCTION+ AS CAPITAL1 & NOT BY ! M]E AVAILABILITY ( MEANS ( PAYM5TS 
MANUFACTUR$ BY GOV]NM5T4 

  

#a4 ,! ,G5]AL ,!ORY1 P4 #c#d#i4 

#b4 ,P4 ,K4 ,CROSS]1 ,/ATE ,CAPITALISM 9 ! ,ECONOMY ( ! ,UNIT$ ,/ATES1 P4 #a#d4 

,FROM 3 ,M>XI/S4ORG4 

,*RONOLOGY 3 
,M>* #c1 #bba 3 ,*APT] #ae -- ,ADD$4 

 FILE G5]AT$ FROM 3  
HTTP3_/_/REVOLTLIB4COM_/