Re: Extrapolating A+B Part 1

"Obviously the interest is taken out of circulation of the subsequent
money supply loaned for productive and or consumptive reasons etc..."
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Nothing is taken out of circulation to pay interest, either
subsequently or concurrently.

Think in terms that all the money in circulation arises from bank
loans. The general theorem is: Loans create deposits; the repayment of
loans cancel deposits. It is what economists describe as the *pure
creditary economy*. There is the flux of loan principal from the
banks, which refluxes back with loan amortization.

Plot the flux and reflux on the same chart against time. The process
take place through time, hence the flux may be said to *lead* its
reflux. See the attached illustration.

Depicted is the condition of quasi steady state, which means things may
be changing but the relationship between the parameters is remaining
constant. The ratios or coefficients between the parameters are
remaining constant, etc. For example, if the flux doubles, the reflux
doubles concurrently. In mathematical terms, we say that the rates of
increase to both flux and reflux are remaining constant. Such change
is depicted on plots by straight lines.

The instantaneous differential between the flux of loan principal and
its reflux depicted at T1 is the rate of accumulation to account
balances at T1.

The differential and therefore the volume of money is not affected by
interest, which is merely the transfer payment from the account balance
of one party to another for services rendered--in this case financial
services.
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