The Cycle of Money - Minimum Escape Savings and Financial Liquidity

The Cycle of Money - Minimum Escape Savings and Financial Liquidity

May, 2024 | Constantinos Challoumis
This paper explores the cycle of money and its relationship with minimum escape savings and financial liquidity. It examines how the velocity of these factors influences the behavior of the money cycle under normal conditions. Escape savings are those that leave the economy, while enforcement savings remain within it. The study uses a Q.E. method approach to analyze how these savings affect consumption and investment in an economy. The research also discusses the arm's length principle and the fixed length principle, which are used to determine tax obligations and ensure fair taxation in controlled transactions. The analysis shows that the fixed length principle can lead to higher tax revenues by ensuring that companies pay taxes based on their actual profits and losses. The study also highlights the importance of financial liquidity and how it affects the cycle of money. The paper concludes that when escape savings are limited, the economy has a maximum positive orientation, leading to increased consumption and investment. The study also shows that limited escape savings can transform the logarithmic form of the velocity of escape savings into a linear form. The research provides a comprehensive analysis of the cycle of money and its impact on economic policies and tax systems.This paper explores the cycle of money and its relationship with minimum escape savings and financial liquidity. It examines how the velocity of these factors influences the behavior of the money cycle under normal conditions. Escape savings are those that leave the economy, while enforcement savings remain within it. The study uses a Q.E. method approach to analyze how these savings affect consumption and investment in an economy. The research also discusses the arm's length principle and the fixed length principle, which are used to determine tax obligations and ensure fair taxation in controlled transactions. The analysis shows that the fixed length principle can lead to higher tax revenues by ensuring that companies pay taxes based on their actual profits and losses. The study also highlights the importance of financial liquidity and how it affects the cycle of money. The paper concludes that when escape savings are limited, the economy has a maximum positive orientation, leading to increased consumption and investment. The study also shows that limited escape savings can transform the logarithmic form of the velocity of escape savings into a linear form. The research provides a comprehensive analysis of the cycle of money and its impact on economic policies and tax systems.
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