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THE MONETARY SYSTEM AND ENTROPY

Historically, the discovery of the law of entropy had important ramifications in monetary theory. The heterodox policy prescriptions of Silvio Gesell and Frederick Soddy were largely based on recognition of an asymmetry arising from the existence of a monetary system that evades entropy and the irreversible effects of the passage of time. According to Gesell, this asymmetry must be eliminated if the economic system is to rid itself of the underlying cause of endemic crises. The solution resides in systematically taxing liquid holdings.

 

 
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