Money and Credit in Contemporary Capitalism

Abstract

The theory of the monetary circuit is developed from the capitalist system. It is born from a monetary economy of production where money is a creation of the State. The banks create money to satisfy the needs of the entrepreneur and the capitalist in the circuit of production. When that money is spent, it returns and is destroyed when paying the credits granted and the taxes to the State. The level of profit depends on the salary restriction to the extent that interest must be paid to the banks, therefore the increase in the interest rate implies a reduction in the salary of the workers. An increase in investment and in the expected deficit does not impact the price level but implies an increase in the payroll and in production