A Physical Review on Currency

TL;DR

This paper presents a theoretical model of currency as an unconditional credit symbol within a self-sustainable economy, revealing fundamental principles and addressing gaps in traditional monetary theory.

Contribution

It introduces a novel economic model that redefines currency's role and properties, providing new insights into monetary principles and inflation.

Findings

Currency's primary function is saving-replacement rather than transaction equivalence.

Ideal currency efficiency aligns with minimal practical value.

Intrinsic inflation arises from the contradiction between fixed currency face value and depreciable goods.

Abstract

A theoretical self-sustainable economic model is established based on the fundamental factors of production, consumption, reservation and reinvestment, where currency is set as a unconditional credit symbol serving as transaction equivalent and stock means. Principle properties of currency are explored in this ideal economic system. Physical analysis reveals some facts that were not addressed by traditional monetary theory, and several basic principles of ideal currency are concluded: 1. The saving-replacement is a more primary function of currency than the transaction equivalents; 2. The ideal efficiency of currency corresponds to the least practical value; 3. The contradiction between constant face value of currency and depreciable goods leads to intrinsic inflation.