Demand is elastic. Money is not. Goods and services can be produced in larger quantities as the need for them grows but money is inelastic, to use a term from economics.

As the cost of a product or service goes up the Demand for it goes down. If the same product or service can be produced more efficiently at lower cost more people will buy it.

The Demand for money is infinite theoretically but due to the nature of money the phrase is a contradiction. People will not pay anything for any amount of money except in the sense that money is de facto worthless and as more is produced the less its units are worth.

Governments confront this inelasticity daily. They would for example, like to create more development in Muskoka. Theoretically they could advance the communities in Muskoka billions of dollars. They could reduce the interest rate to zero for Muskoka residents, they could have the Central Bank print billions of dollars in banknotes and have them dropped from helicopters hovering over Muskoka., they could open a government department that issued grants to anyone in Muskoka applying for one for whatever reason for whatever amount. The people of Muskoka could purchase anything they wanted. But commerce in Muskoka would vanish. Who would work if there was unlimited free money to be had?

As long as the money flowed in the price of everything would increase. No one would sell anything in Muskoka because no one would need to sell anything in Muskoka. They had all the money they wanted without selling anything. But as fewer people wanted to sell or needed to sell and as people got more and more money for selling less and less inflation increases and money gradually becomes worthless.

We all want money when we can use it to buy goods and services. When it can no longer purchase anything no one wants it. This happening gradually over time is called inflation. People increase their hesitancy to accept money and their preference for things with real value. The value of money goes down and the value of goods and services goes up.

Money is an economic measuring stick. It is value in physical form or the concept of value given a material body. Value is the spirit that inhabits the physical body of money. Without value money is worthless. It is, oddly enough, the inelasticity of money that gives it its value. If we could produce it wantonly it would serve no purpose. The inelasticity of money forces us to create value. But this creates a conundrum. Bill cannot get his house painted because he has no money. Sue cannot get work painting Bills house because Bill has no money. As a consequence Sue cannot get her garden work done because she has no work. Bill can't get any gardening work because Sue cannot afford to hire him.

The solution is obvious and works up to a point. Bill and Sue could exchange services. This is barter and works when the exchange is simple and the possible configurations limited. When an economy has millions of separate goods and services bartering requires the capacity to deal with billions of possible permutations. It is mathematically impossible to operate a modern economy using barter.

Banks, governments, venture capitalists and others have done their best, within the limitations of their position, to increase prosperity. It is in no ones best interest to increase poverty. Regardless of our wealth or position we all have limited funds. These funds once allocated are lost to all other uses at least by us. A bank that makes a loan for a million dollars for a Muskoka development is short a million dollars for any other use. Some of this may come back to the bank as deposits by the person who received the money or those with whom he spends it but regardless the bank is faced with the inelasticity of money. The more times the money is lent out the less valuable it becomes.

If the bank lends money to developers to purchase properties in Muskoka land prices will go up and it will take more and more money to purchase the same amount of land.  As land prices go up and everything else goes up in response to inflation it will become harder and harder for borrowers to repay their debt. The money they get will be worth less than the money they borrowed. With increased risk of default the bank has to increase interest rates and reduce its exposure to default. Thus choking off growth.

What happened is that money was chasing after the fixed values of undeveloped land. No value was being created to justify the higher prices, so money lost value. We are rationally and morally obligated to create value. But money only represents value. If we make more of it the unit of measure gets smaller. If our measuring stick measures miles and we make more though there is only one mile to measure then the stick has to be divided into units of yards. To add to the stick only turns the unit of measure into feet, then inches, then half inches and so on. Unless we create more value for the stick to measure.

  

Increasing the density of our connections enables us to make exchanges without money.

 

 

 

 

 12 is the number representing Gods promise to the inhabitants of the earth. Covenant (promise) is mention 300 times (12 x25). Genesis 12:1 is the 300th verse of the bible in NT all forms of promise are mentioned 72 times (12x6) When this number is seen in text it means the promises of God are still valid. The 12 time Noahs name is mentioned Scripture says Gen 7:1 and the lord said unto Hoah, Come thou and all thy hous into the ark for thee have i seen righteous before me in this generation. In Gen 12 God makes his Covenant with Abraham, 12 Tribes come from this. in Elim 12 wells of water Hagar produced 12 sonsJesus had 12 disciples Isaiah 58:12 mentions Jesus of the repairer of the breach of the earlier covenant recorded in the 12 book II Kings Jesus called his diciples apostles mentioned 60 times (12x5) The New Jerusalem is 12,000 furlongs lxbxh. Jeruslem is mentioned 144 times in the new testament (12x12).

 


 Limitations Of Money: Muskoka Example