Chapter 9 - Stagnant Money.

The Population of Italy is 59 million. The Money Supply is €1441 billion at February 2017. There exists in Italy approximately €24000 for each Italian. This is the cash currency which amounts to a little over €3000 in euro cash for each Italian and €21000 virtual money in bank accounts. This should be plenty of money to run an economy. The problem is that Italian money is idle. It is slower than a snail. It is slower than watching the paint dry. The paint will have faded by the time the money moves again. Italian money has a velocity of 1.2. This means that on average money only changes hands once in ten months. Clearly, some will change rapidly, but most of it sits idle for years on end. Money was a gift to all mankind by one of our ancestors to facilitate trade. This great inventor did not invent it to be hoarded. Hoarding is a misuse of money. Hoarding takes money out of circulation curtailing the trade that sustains human life. Humans exist by trading with each other. The money token is created in any quantity at no cost to facilitate trade. Yet in Italy, it sits in bank accounts to be worshiped by hoarders. This hoarded money is as useless as a car with no wheels. It is as useless as a plane with no wings. This hoarded money is useless to society whilst it sits idle. Wealth is not in the money but in the transactions enabled by money. If all money were to be hoarded we would starve. The hoarding needs to cease.

Not many Italians have €24000 to their name. This money is hibernating like the great bears in the accounts of money hoarders. The problem is not caused by the average wage earner for the wage earner has empty pockets by the end of the week. This Hoarded Money approximates to the 'minimum monthly balance' in bank accounts. This is held by those that have 'more money than they can spend'. The problem is that the well off are hoarding money.

Italy has plenty of money. It just does not carry out the duties of money. The task is to make this money move. It must be removed from the hoarders. However, this should not be done too quickly. A big move of money from hoarding to circulation is the essential characteristic of hyperinflation.

The calculations run like this. To obtain a ten percent increase in economic activity in one year, it is necessary to boost the volume of circulating money by ten percent. This could be done by creating more money, which would entail more debt. This would require €13.6billion, if it were put straight into circulation or would require €136billion if 90% were to become hoarded as at present. A more intelligent procedure is to make the existing money move faster. If we aim for a ten percent annual increase in the economy, the volume of money that actually circulates on a monthly basis needs to be boosted by ten percent. As only ten percent of the Money Supply is moving, this equates to one percent of the Money Supply. One percent of the money supply needs to be taken from Hoarded Money. This equals about 1.1% of Hoarded Money. 1.1% of Hoarded Money moving into Circulating Money causes a 10% increase in economic activity. On a monthly basis, 1.1% of Hoarded Money is approximately 0.1% of Hoarded Money. A tax of 0.1% of the minimum monthly balance will cause a 10% annual increase in the economic activity. The collected tax needs to be spent back into circulations such that is stays in circulation. This is tricky as the financial deviants are remarkably good at sniffing fresh money to add to their hoards. These are the vultures of the system. It is not their total wealth that is the problem it is the money tokens that they hold idle. They can hold wealth without holding money. Money must move constantly and must not be allowed to stop. The definition of money is incorrect in this regard.

In the following diagram, a ten percent rise in the Circulating Money is caused by a 1.1% fall in Hoarded Money.

A reduction in Hoarding causes a rise in economic activity by Andy Chalkley. Creative Commons Attribute. www.andychalkley.com.au