Superphysics
Circulating Capital
2 minutes • 224 words
Table of contents
Circulating Capital is anything that produces value by changing owners. It has 4 parts:
- Raw materials
Examples are the stock of food owned by the butcher, farmer, wheat-merchant, brewer, etc.
- Unfinished products
Examples are clothes, furniture, and building which remain with the growers, manufacturers, drapers, timber merchants, carpenters and joiners, brick-makers, etc.
- Finished products
These are items with the merchant or manufacturer but not yet disposed of, or distributed to the proper consumers. Examples are the finished work in the shops of the smith, cabinet-maker, goldsmith, jeweller, china-merchant, etc.
- Money
This circulates and distributes the three other stocks to their proper consumers. This is essential in a money-based commercial system, but not necessary in a barter or Xcommerce system (to be explained in Chapter 6).
Money as Circulating Capital
Money as a circulating capital leads to the concept of inflation.
Inflation
- Demand-pull money-price Inflation
Here, prices rise because of excessive demand caused by money going to consumers.
- Cost-push money-price Inflation
Here, prices rise because of increased costs caused by supply not matching the increased demand.
The USD is like training wheels for world trade. It’s essential to get started with trade, but after humans learn to trade, they can get rid of it to maximize trade.
