Micro-economics is rightly concerned with and ruled by cost and profit. Macro-economics is aggregate numbers whose purpose (supposedly, but seldom actually is) to discover the reasons for disequilibriums in order to craft policies which will create the classical goals of economics, namely balance, equilibrium and flow.

As macro-economics is only about aggregate numbers and what they mean, AGGREGATE diminutions to money like profit, savings and taxes, and excess costs like interest, replacement of equipment and facilities, plant charges of whatever nature, re-investments of profit and savings and both normal waste and politically enforced waste….are all simply that, that is waste…in the eye of macro-economics.

Again, the above macro-economically conceived waste are aggregates, and they all are either diminutions to the circular flow of money or additional costs over and above the cost of original deposits of financing.

If the discount ratio consists of ALL these aggregate numbers and factors and effect both the numerator (diminutions of money from the circular flow of the economy) and the denominator (excess costs over and above original amount of financing)…then THE TOTALITY of them is erasable by their input into the ratio formula of the discount, resulting in a percentage which would equate the costs of total INDIVIDUAL consumption and total costs/prices of production…INCLUDING ALL BUSINESS CONSUMPTION AT RETAIL…BECAUSE THAT FIGURE IS NOTHING BUT AN UNCONCLUDED AND ADDITIONAL COST OF PRODUCTION AS WELL WHICH OCCURS WITHIN THE GIVEN PERIOD THAT THE DISCOUNT IS FORMULATED FOR AND SO MUST ALSO BE ACCOUNTED FOR.

Thus the percentage of the discount would not merely reflect some smallish percentage of (already fudged) consumer price index of inflation that perhaps reflects only monetary inflationary effects, but that percentage plus the percentage created by ALL cost inflationary effects as per above as well.

Profit making systems are monetarily and cost inflationary, and thus inherently economically unstable as Steve Keen has recently RE-discovered…nearly 100 years after Douglas initially recognized it. And rebating of the TOTALITY of participating merchants’ discounts back to them enables an evolutionary resolution of that inherent instability, saving such systems from themselves and effecting not just an equilibrium of costs/prices and individual incomes actually available moment to moment in the economy, but actual price DEFLATION as well and all of these effects in one fell swoop.