A first task thereafter will be to correlate the need for more or less money in the productive process with the magnitudes and frequencies of their turnovers.  On that basis it will be possible to distinguish stable and unstable combinations and sequences of rates in the three main areas and so gain some insight into the long-standing recurrence of crises in the modern expanding economy. [CWL 15, 53-4 and 177]

Consult Insight into the “Baseball Diamond”. 

Again, more fully,

(The Diagram’s) basic terms are (implicitly) defined by their functional relations.  The maintaining of a standard of living (distinct process 1) is attributed to a basic process, an ongoing sequence of instances of so much every so often.  The maintenance and acceleration (distinct process 2) of this basic process is brought about by a sequence of surplus stages, in which each lower stage is maintained and accelerated by the next higher.  Finally, transactions that do no more than transfer titles to ownership (distinct process 3) are concentrated in a redistributive function, whence may be derived changes in the stock  of money dictated by the acceleration (positive or negative) in the basic and surplus stages of the process. ¶So there is to be discerned a threefold process in which a basic stage is maintained and accelerated by a series of surplus stages, while the needed additions to or subtractions from the stock of money in these processes is derived from the redistributive area. A first task thereafter will be to correlate the need for more or less money in the productive process with the magnitudes and frequencies of their turnovers.  On that basis it will be possible to distinguish stable and unstable combinations and sequences of rates in the three main areas and so gain some insight into the long-standing recurrence of crises in the modern expanding economy. [CWL 15, 53-4 and 177]

Now every unit of enterprise involves a turnover magnitude and a turnover frequency.  The statement would be merely a truism if it meant no more than that the rates of payment received and made by the unit of enterprise involved quantities and velocities of money.  But the statement is not a truism, for it involves a correlation between the quantities and velocities of rates of payment and the quantities and velocities of goods and services. (CWL 15, 57)

the quantity alternative in the rates of payment is conjoined with the quantity alternative in the rate of production, and the frequency alternative in the rate of payment is conjoined with the frequency alternative in the rate of production.  The two cases of quantity-velocity are not only parallel but also correlated. (CWL 15, 57)

It is to be observed that there is no simple correlation between quantities of money added to the circuits or subtracted from them and, on the other hand, the rates of flow in the circuits.  For the rates of flow in the circuits are not just quantities of money but quantities multiplied by velocity [CWL 15, 52]

It is now necessary to state the necessary and sufficient condition of constancy or variation in the exchange value of the dummy.  To this end we compare two flows of the circulation: the real flow of property, goods, and services, and the dummy flow being given and taken in exchange for the real flow….Accordingly, the necessary and sufficient condition of constant value in the dummy lies in its concomitant variation with the real flow. (CWL 21, 38-39)

Additional money should enter the system through the supply function, not through the demand function.

the supposition that circuit acceleration to some extent postulates increments in the quantity of money in the circuits … points to excess transfers to supply, to (S’-s’O’) and (S”-s”O”), as the mode in which increments in quantities of money enter the circuits. [CWL 15, 61]

… , the normal entry and exit of quantities of money to the circuits or from them is by the transfers from the redistributive to the supply functions.  [CWL 15, 64]

One cannot identify a reduction (through savings) of basic income with an increase in the supply of money (for investment), – (such a reduction is a redirection, not an increase) – for a reduction of basic income is only one source of such supply; moreover, it is neither the normal nor the principal source of such supply; … principally the increase in the supply of money is due to the expansion of bank credit, which is necessary to provide the positive (S’,-s’O’) and (S”-s”O”) needed interval after interval to enable the circuits to keep pace with the expanding productive process. [CWL 15 142]

… positive or negative transfers to basic demand (D’-s”I’) and consequent similar transfers to surplus demand (D”-s”I”) belong to the theory of booms and slumps.  They involve changes in (aggregate basic or aggregate surplus) demand, with entrepreneurs receiving back more (or less) than they paid out in outlay (which includes profits of all kinds).  The immediate effect (of these aberrational monetary transfers) is on the price levels at the final markets, and to these changes (in price), enterprise as a whole responds to release an upward (or downward)  movement of the whole economy.  But the initial increased transfers to demand [that is, excess transfers along (D’-s’I’)  and (D”-s”I”) ] are not simply to be supposed.  For that would be postulating without explaining the boom or slump. [CWL 15, 64]

The two main disequilibria and 1) too much or too little in the system, and 2) maldistribution of the two types of incomes – income to be saved for investment vs. incomes for purchase of point-to-point consumables.  The flooding of the monetary circuits with more money than is needed for magnitudes and frequencies will constitute an inflation in the operative circuits and/or an inequitable inflating of the secondary markets for previously issued financial assets. The central adjustment in the case of maldistribution is adjustment of the rate of saving.  The flows of savings for investment vs. incomes for purchase of point-to-point consumables is represented in the model above by the crossovers, c”O” and i’O’.  And the condition of equilibrium is

G = c”O” – i’O’ = 0   [CWL 15, 54]

The purpose of this section is to inquire into the manner in which the rate of saving W is adjusted to the phases of the pure cycle of the productive process.  Traditional theory looked to shifting interest rates to provide suitable adjustment.  In the main we shall be concerned with factors that are prior to changing interest rates and more effective.  [CWL 15, 133]

The central adjustment is variation in the rate of saving.  This rate may be defined, conveniently for present purposes, as the ratio of surplus income to total income.  Assuming that the rate of saving will not differ appreciably because income is derived from basic or surplus outlay, we may denote this rate by the symbol w, so that 

w = I”/I’ + I”  (CWL 15, 131-32)