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Great post but small inconsistency 'The total market value of those shares (the market cap) is equal to and determined by the expected present value of your company's profits.' No its the NPV of profits + NPV of liquidity premium - as you state further down Which unifies with williamson And helps explain why not conform to Mog - Miller - which is a result that only holds in equilibrium anyway
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Graziani triangle - type in more than three letters in my citation manager Graziani, Augusto (1989), Theory of the Monetary Circuit, ISBN 978-0-902169-39-5
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Good attempt but 1) Still relies on loanable funds 2) Value of money is indeterminate 3) Good part is the garsellian monetary triangle Your two traders, 1 banker model is very grasellian and that I think is the solution. Replace the central bank with a private bank, and the agent having a liquidity preference and you find the model is indeterminate as there is no means of determining the stock of money. Imagine however that there is a growth rate x, and there is a central bank. In order to satisfy liquidity preferences and achieve a goal or price stability the public sector must have a net deficit with the private sector of x. Add in a fiscal theory of the price level type equation for government debt and you have a determinate system that holds in the most minimally simplistic investment-savings model without a dud hicks IS curve. I would interpret that equation as the level of net monetary addition necessary to maintain price stability not a budget constraint (a circuitist approach) as in a sovereign currency there is no compunction to government bankruptcy - i.e. it is a price constraint not a budget constraint.
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Nov 7, 2016