One flaw with this model is that the value of money is not absolute, it is relative to the price of goods and services. Furthermore, the rate of circulation of

One flaw with this model is that the value of money is not absolute, it is relative to the price of goods and services. Furthermore, the rate of circulation of money is directly related to the amount of economic activity taking place in the society (since each transaction represents an economic event), and economic activity creates wealth as PG says. I once tried to develop a similar theory to the link, by applying the principles of statistical mechanics, and treating the rate of circulation of money as the temperature, and each actor's amount of economic activity as their kinetic energy. It seemed like a neat approach but it has it's flaws obviously.