| Containership Property of Space Space structure: 4 dimensional (the presence of matter established time, the 4th dimension) Space Capacity: limited Boundary Condition: bounded, within earth Internal Risk: theft/fraud, careless/wreckless use, unforeseen accidents (e.g. fire) External Risk: theft/fraud, market conditions, unforeseen disasters(e.g. fire, hurricane) Purpose: to measure and quantify value of goods and services, and provide a means of exchange between buyers and sellers of goods and services. Identity of Occupants: money Money is the name given to specific objects that can generally be used to pay for goods and services. Money was created by the configured energy of human thought . The concept of a market established the money space. The concepts of banking and investing developed the money space. Specific forces then act on these concepts to expand the money space. Forces Demand (desirability force) Supply (availability force) The Central Bank (monetary force) The Government (fiscal force). |
| Motions The movement of money occurs primarily in the MarketPlace between buyers and sellers. Any entity can be a seller or a buyer. However, in terms of number of participants, most buying and selling occurs between businesses and between businesses and individuals. The government buys and sells also. For example, it sells treasury bonds to raise money and buys good and services from its contractors. The fundamental movement of money in the money space is illustrated in figure MG1. Individuals buy from businesses. Businesses grow and employ workers to whom they pay wages and salaries. Businesses and individuals pay taxes to the government and buy its bonds and other securities. Government buys goods and services from businesses and individuals. Businesses and individuals deposit some of their money in banks in the form of checking accounts and investments. Banks loan businesses and individuals money. The Central Bank loans the banks money and the banks keep their deposit reserves with the central bank. Then there is the movement of money due to foreign trade and foreign investments. This dynamism continues in the money space according to the strengths of the forces of the money space. |
| Change Changes in the money space has to do with the amount of money in the space at various times, the money supply. Money Supply is strictly defined as the amount of cash (currency and coins), travelers' checks and demand deposits (checking accounts) in banks, circulating in the money space. A broader definition includes savings accounts and government securities such as saving bonds and treasury notes. How does the money supply change and what are some of the consequences associated with changes in the money supply? The money supply can be increased or decreased by any of the forces of the money space. Government's tax cuts and tax refunds increase money supply. Its high taxes decrease money supply. The central bank increases or decreases money supply by manipulating the interest (discount rate) it charges banks, and the amount of reserves it requires from the banks. A low discount rate increases money supply. A high discount rate decreases money supply. Low reserves increase money supply. High reserves decrease money supply. Bussinesses and individuals increase money supply when they cash and spend their investments. They decrease money supply if there is a run on banks. Availability of credit is a consequence of an increase in money supply. Businesses and individuals are able to obtain loans for their respective needs. The demand and supply forces are augmented. The result is a vibrant and growing economy. If demand overpowers supply, prices of goods and services rise ( inflation). This scenario is reversed when money supply decreases and credit is widely unavailable. Jobs are lost and a recession occurs if 7% of the work force becomes unemployed. Interactions/Groupings Currencies and coins are the primary groups of money. Currently, gold is a commodity. However, some countries still accept it as money. Equilibrium Fiscal and monetary forces provide the stability needed in the money space. The goal is always to contain inflation and unemployment. POS |
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| Let us use our environment respectfully so that future generations would not label us"prodigal ancestors" |
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