Reconstructing the Quantity Theory (I)

Abstract

The quantity theory is disjunct to the hard core of general equilibrium theory. It does not relate to the formal foundations of standard economics and, vice versa, from the behavioral axioms of standard economics a rationale for using money cannot be derived. The present paper leaves the standard axioms aside and reconstructs the quantity theory from entirely new structural axiomatic foundations. This yields a coherent view of the interrelations of quantity of money, transaction money, saving-dissaving, liquidity-illiquidity, rates of interest, leverage, allocation, prices, profits, unit of account, and employment.

Keywords: new framework of concepts, structure-centric, axiom set, money– credit symmetry, endogeneity, accommodation, neutrality, store of value, full gold-backing, declarative changes of the unit of account, contract equation, perfect inflation–deflation, real balance effect

JEL Classification: E10, E20, E40