In primitive society, before the market economy gained institutionalized character, economic relations were described on the principle of exchange, where some goods directly exchanged for others.Over time, the product will be the first between the mediators (the prototype of money), and the exchange was launched not just between them, and the formula Goods-Money-Goods.But it was their turn to natural law of money circulation at this stage was not known.
With the advent of modern paper money, new trends in the exchange of goods and money immediately.The number of banknotes increased, leading to higher prices and the depreciation of the currency.There was a need for continuous control over the amount of money that, in fact, are only symbols, not carrying a useful value.There was a need to explain the processes that led to the discovery of a new economic law.
law of money circulation can be explained as follows.Money in the performance of its function of means of circulation and payment are constantly in motion.At any time, the country is in circulation for a certain amount of money depending on the amount of goods on the market, the level of prices on them, the degree of development of cashless payments and credit relations, as well as the velocity of circulation of money itself.The higher the speed, the less notes in circulation at the same time.The velocity of money - the average number of turns, which make money in the performance of its two main functions - the means of payment and treatment.
Thus, the law of monetary circulation - is the objective law of economic relations, according to which is determined by the amount of money needed for treatment in certain circumstances and in a specific time period.It was formulated by Marx.
amount of money must be equal to the sum of the prices of goods, which were sold on credit, net of amounts mutually compensating payments, taking into account the sums of those maturity should already be paid.The result of these computations is divided by the average number of turns that make the corresponding monetary units.According to this scheme, you can calculate the amount of money that at some point needed for treatment.
formula, which is subject to the law of money circulation can be expressed simplistically as follows: D = MhTs / sd., At the same time M - the total weight of the goods;C - its average price;S. o.- average turnover rate (the number per year).
Under the gold standard, monetary circulation regulated withdrawal of the coins out of circulation, when they reduce the need for, and release them in the back of the picture.In today's paper money circulation, often the channels of funds are overcrowded, leading to inflation (devaluation of banknotes).
law monetary inflation explains the drop in the price of money because of their redundancy, which were issued into circulation.Such an amount greater than required for normal turnover.As a result, it begins rising prices, which leads to a redistribution of the gross domestic product for the benefit of monopolists (SOEs) and the shadow economy.This is made possible by retaining the same level of wages and other incomes.
Law monetary interdependence determines the amount of money supply and inflation.Release of surplus money necessarily lead to a drop in production and disparities in the development of various sectors of the economy, lagging production capacity of secured payment demand, the fiscal deficit.If the wrong policy of the state, banks and enterprises, these disparities may be even more strengthened.
