Dynamic Theory Of The Money Market, Disposable Money And Interest

Abstract

To understand the money market one has to understand the different ways in which income circulates, specifically the amounts of money that are disposable, together with the dynamic supply of money and circulating capital. These three items all depend on the basic equation of macroeconomics, which is that savings equal investment, affecting it and completing it. This is the underlying principle of the theory of money and the rate of interest. The money market comprises those that want money, whether to engage in business or to speculate, and the money that is there to be had, i.e. money for sale, institutional money and bank money. Part of the theory of money was developed in the period between 1916 and 1925 by Germán Bernácer (Alicante, Spain 1883-1965) and differs from Keynesian ideas and modern macroeconomics.