THERMOECONOMICS - Vocat International Ltd
THERMOECONOMICS - Vocat International Ltd THERMOECONOMICS - Vocat International Ltd
16 Copyright: John Bryant, VOCAT International Ltd 2012, for personal use only. Figure 5.9 Projections of percent price change for the UK and USA economies using a thermodynamic equation (5.11), set against actual annualised quarterly changes 5.2 Money Entropy Monetary systems are subject to variations in entropic value, just as the resources passing through them are. Such variations in money entropy as occur, however, will be confined only to preservation of the exchange value of money balances. They will not include entropy changes arising from efficiency losses incurred through consumption of the productive content of resources to produce output; the latter occur through the normal mode of flow of product value through an economy. Money has no value except as a
Copyright: John Bryant, VOCAT International Ltd 2012, for personal use only. means of exchange between items of real value. On a normal basis therefore, money entropy operates at the margin, with monetary authorities acting mostly to preserve currency values. From the development at chapter 4, readers will appreciate that money entropy (in particular equations 4.23- 4.25) has been developed to be a measure of the motivating force in an economic system. From all the foregoing, entropy value in a monetary system might therefore be described as potential entropy, though a real effect might be the complete loss of value from printing money. A consumer in a poorly managed rogue economy, armed with a pile of money that only a day or so previously merited an exchange value of a certain amount, might find subsequently that he could not exchange the money for anything. Clearly the nominal value of the money had suddenly experienced a complete exit of entropic value; very real for the man involved, entailing a loss of purchasing power of items of real value which do have a real useful productive content with a realisable entropy value. Despite the loss of economic entropic value, the products and services that our man had already claimed ownership of do not contain anymore or less productive content than they did before. They would loose their inherent productive content over time in the normal entropic way, though perhaps our man might try to conserve their use! If the man had traded on a barter basis instead, he might have retained his value. The analysis so far indicates that the UK and USA economies have followed polytropic paths, if price level P is replaced by specific price PN, equal to price level P divided by money instruments N (M4 and M2 money basis); and vice-versa if money instruments N are replaced by specific money NP, equal to money instruments N divided by the price level P. It will be appreciated that movements in the elastic index n are continually occurring, with wild swings when volume change is small or turning negative. From the Second Law of Thermodynamics, the net change in entropy per unit of stock through any cycle is stated as: dQ ∆scycle = ∫ ≥ 0 (5.12) T Entropy through the cycle tends to rise. Moreover, a consequence of dividing price by money units to compute a specific price PN, in order to get round the problem of a depreciating currency, is that entropy increase may 17
- Page 1 and 2: THERMOECONOMICS A Thermodynamic App
- Page 3 and 4: Contents Preface 1 Introduction 1 1
- Page 5 and 6: Preface This book, first published
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16<br />
Copyright: John Bryant, VOCAT <strong>International</strong> <strong>Ltd</strong> 2012, for personal use only.<br />
Figure 5.9 Projections of percent price change for the UK and USA economies using a<br />
thermodynamic equation (5.11), set against actual annualised quarterly changes<br />
5.2 Money Entropy<br />
Monetary systems are subject to variations in entropic value, just as the<br />
resources passing through them are. Such variations in money entropy as<br />
occur, however, will be confined only to preservation of the exchange value<br />
of money balances. They will not include entropy changes arising from<br />
efficiency losses incurred through consumption of the productive content of<br />
resources to produce output; the latter occur through the normal mode of<br />
flow of product value through an economy. Money has no value except as a
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