Sectors and real money, liquidity economy, economy changes
The importance of money as means of payment and as a unit of account and the relationship between the money supply and the change in the general price level is among the topics of greatest interest of the first economic thinkers. Initially, the concern was with the role of money in the functioning of an economy changes. Then, with the definition of property that could play better monetary function, for its intrinsic and its widespread exchange value. Later, we tried to know the causes of the first currency devaluation outbreaks. Finally, the investigation focused on the relationships between the variables of monetary and real sectors, seeking to define how the supply and demand for currency define the interest rate and what connections between the interest, the general liquidity economy, the general level of prices and the performance of the real sector.
The first approaches led to the development of the quantity theory of money, in its embryonic form:
The value of money and the price level are defined primarily by the quantum of supply monetária.Quando ago, in relation to real assets and the production of goods and services, a superabundant supply of means of payment, these are devalued making the prices of other assets increase.
[...] In the eighteenth century, J. Locke argued that the value of the currency in relation to other commodities did not depend only on its abundant or scarce availability, but also the speed of your movement. In the eighteenth century, D. Hume, a thinker transition between mercantilist and classic synthesized quantitative approaches in Political Discourses, published in 1752. He noted that "the ratio of currency in circulation and the goods on the market that determines the prices He argued that the decline of the value of the meda and its counterpart, the high prices of traded goods, were attributable to the abundant supply of monetary metals, translated by the Spanish and Portuguese from its mines overseas and by the British, French and Dutch, by way of trade and smuggling. [...]
[...] With the management of conventional instruments of monetary control, the central bank can either contract the money supply, expanding interest, how to expand the money supply, reducing the rate of juros.A liquidity and interest transmit to the real sector, contracting or stimulating the different categories of high agregado.Juros expenditure can attract both consumption and the accumulation of capital; and low rates can act as dispêndio.E of stimulating factors the aggregated expenditure pressures on the current levels of aggregate supply can then transmit to the mercado.Estes prices, but it does not result only from the behavior of monetary variables, so signal a whole set of relationships established within each of the two sectors, the monetary and the real; and still reflect the ways and the bases are established under which the interactions between these sectors. REFERENCES: Heilbroner, Robert L., The formation of the economic society, 5th Edition Ed Guanabara - . RJ ROSSETTI, José Paschoal, Introduction to economic. [...]
[...] The equation of I. Fisher exchanges, set in 1911, in The purchasing power of money. The Currency, Prices and the Real Sector Performance Although the change in currency value (or price) is not only attributable to changes in the money supply, but wide range of other causes, quantitativismo expressed by the famous Fisher exchange equation has been widely proven by historical experience. Obviously theoretical accuracy of the equation does not reproduce accurately the real world. The inter-related variations of P and V are not met exactly as arithmetic rules of quantitativismo: the acidentalidades and the multiplicity of factors affecting the economic order introduce deviations in actual results of most theoretical simulations. [...]
[...] Then, with the definition of property that could play better monetary function, for its intrinsic and its widespread exchange value. Later, we tried to know the causes of the first currency devaluation outbreaks. Finally, the investigation focused on the relationships between the variables of monetary and real sectors, seeking to define how the supply and demand for currency define the interest rate and what connections between the interest, the general liquidity economy, the general level of prices and the performance of the real sector. [...]
[...] Perversely affect domestic markets and external transactions, working in the real sector as destabilizing factor of aggregate supply and prices. In Brazil, Papelistas and bullionists in the first half of the nineteenth century, reproduced this classic controversy. The first believed in the developmental potential of scriptural money; the second, in the long-term effects of monetary stability. Almost like, history has shown that the risks and turbulence of monetary control is not offset by the ephemeral euphoria produced. The quantitativismo just predominando.E more: a strong correlation between changes in the money supply and the price changes, empirically defined, led to the basic expression of the quantity theory of money. [...]
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