ABSTRACT
Definition and structure The transactions characteristic of the pure-money complex are distinguished by the fact that they are performed purely in terms of time and money. Taking the most general case of two transactors, A and B, one finds that they are tied to each other by two series of payments, the first consisting of sums, p1, p2,…, pm paid by A to B at times t1, t2,…, tm, and the second of sums, p1, p2,…, p′n paid by B to A at times, t′1, t′2,…, t′n. A number of familiar types of transaction fall within the terms of this definition, according to how the different members of the series [pi], [ti], [P′i] and [t′i] are determined. To take the simplest possible case, with each series having only one term, and so that p<p′ and t<t′ (which means that t occurs earlier than t′), the transaction then consists of a loan of the sum, p, by A to B, at time t, repaid in the sum, p′, at time, t′, to give a rate of interest equal to (p′−p)/(t′−t). In the more general case, a loan, p, for a fixed term, T, at a prescribed rate of interest, r, payable at n prescribed intervals, h, (so that h=T/n), can be expressed in the following form:
By way of contrast, a life assurance policy, with a sum assured, p′, and periodical premiums, p, payable at prescribed intervals, h, takes this form:
These three examples, combined with the definition of the pure-money complex, lead immediately to a number of important conclusions. One is that pure-money transactions must have a quite explicit institutional basis. That is, they take place ‘within a regularized pattern’ (see p. 9 above) according to prescribed forms. The usual basis, in any modern monetary system, for any of three examples given above is a printed document with blank spaces to be filled in with the purely numerical factors. This means, in practice, that the different types of transaction are limited,2 while the volume of transactions within each type is high. Banking, which is pre-eminently a pure-money institution, shows this very clearly.
