1. The Logic of financing social Production By Renée Menéndez

2. The basic setting Just let us assume, that we have a economy with four sectors: Central Bank, Commercial Banks, Entrepreneurs and Households. From the beginning, all balance sheets are zero, only households own productive inputs.

3. The money creation step Now we have to see, how money comes into existence. Because it is no commodity, there is no need to produce it. So it comes into existence by a credit from the central bank to a commercial bank.

4. The business loan step Equipped with money M the commecial bank is able to make a loan to the entrepreneurs. Note, that the household is still unemployed.

5. The attraction of resources Equipped with money M the entrepreneur is able to buy the means of production from the households. That seems trivial. But only the purchasing power of money allows him to attract the necessary input.

6. The production step Now we have the case, that the managers of production are able to perform the transformation of „idle“ ressources into output say 100 units of a good, which has some utility for the households.

7. The market step Regardless of any questions about interest and profit, we can have a market clearing, when the price of a unit is equal to M/100. Every social enterprise results finally in sharing the outcome.

8. The debt consolidation step When output is sold, the money used for THIS process of social production is no longer needed. Repayment of Debt means, that in this sense, the money has fulfilled it´s duty for the entrepreneur.

9. The money destruction step When finally the banks do not have any further use for the created money they can repay the debt to the central bank. This transaction really means, that money is destroyed.

10. Why all that stuff? Money is no commodity Money is able to attract input Money is able to settle, how much is everybody´s share of output Money vanishes from earth, when the social enterprise, for what it was used, is finished.

11. But now... Money is of course „neutral“. The amount of money does not change in any way the result of the social enterprise. (In a way self evident!) Money lives it´s own life with creation and destruction as long as it is needed. Money has some implications to the processes of the „real“ world...

12. Money forms the basis for a Autopoietic System! - it forms a inner circle - it follows it´s own logic - it has external effects to the environment: „Money makes the world go round“ - and doesn´t care, if there is any real surplus

13. Some implications Money is a relative measurement of production - it needs no intrinsic value - it must not be backed by gold - it´s function is to facilitate production and to asess, which is the individual households share - in that sense, it settles the distribution of „real“ income

14. Conclusion Money interacts with the real world, but exists for it´s own