1+1=2
1x1=1
1x2=2
If you have one dollar it can equal two if you use it more than once. This is the basic principle of currency curculation. A dollar is as valuable as the number of times it is used. The more it is used, the more valuable it is. The exchanged may have varying value, but the dollar will still gain value from the transaction.
The faster the transactions occur the more efficient and valuable the economy it is in.
The total currency (in paper and coins worldwide) is 46.513 trillion dollars. The total world GDP is roughly 69.49 trillion dollars. This means more than half of all currency in the world is only used once a year. There is a vast amount of money in limited circulation.
The faster transactions take place, the faster the value of money grows. When it grows and moves faster, the global economy will improve in whatever form you wish to look at. Government policy for economic improvement should focus on increasing currency movement.
The policy of increasing the amount of currency in circulation is flawed in that it does not gaurantee circulation of the currency. Since the spending of government in debts requires the printing of money, in circulation currency is not used. It only increases the amount of currency in circulation.
Governments should not only try to move currency faster, but make certain their debt load is as low as possible. They should also cap their debt at the total value of their circulating currency to ensure, in event of default (countries do go "bankrupt" internationally) that a 100% will gain the needed revenue to pay off the debt. This is not a recommended policy, but a worst case scenario.
Governments should also place a cap level of the amount of currency per person they are allowed to have in circulation. The United States currency has about $2,000 dollars in circulation per person. This has been steadily rising in the past decades because of the need to print money to pay debts.
In combination the debt cap level and the currency per person cap will ensure that economic stability will be determined by the speed of circulation which should be a deciding factor in who gets elected to office.
When a government speeds up circulation, take sales tax, the revenue will increase regardless of amount of currency in circulation. A dollar spent twice will give more revenue to the government over a dollar spent only once.
With the increased revenue from an increase in the speed of circulation the government will be in a better position to provide for the needs of citizens unable to have currency circulate towards them.
I created this theory today. This blog post gaurantees in any lawsuit (should someone try to make currency flow in their direction) that I had creative license here. I allow this to be used in any discussion, as long as I am the one who is quoted. Keynesian Economics, Obamanomics, Reaganomics (see Keynesian), and now Randnomics.
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