Business cycles and all that

Business cycles under coherency and constant measurement error assumptions using the multi-stage distribution networks model.

When the household sees a drop in credit card interest rates, they estimate an increase in the economies of scale across the vector of goods. Their response is to buy greater lots of goods, less frequently, maintaining larger variation in the inventory at home. That is, they accrue some benefit in measured gains in efficiency in the supply chains, and they lower their transaction rates. (Hayek again and minimization of transactions)

If investors somewhere in the middle of the supply change see a drop in medium term interest rates, they to act as if there has been increases in economies of sale up the chain, and they to maintain larger lot purchases, less often and manage a larger queue variation at their level of the supply chain.

All participants, down the chain, act so as to reduce the number of transaction, but accruing their share in returns to scale.

At any point in the queuing network for any good, including money, a "drop in interest rate" in interpreted as a gain from economies of scale, from that point up the distribution chain, and the economies of scale are passed down the distribution networks by reducing the number of transactions and raising the lot size per transaction, and increasing the variation in queue size.

If we add the condition of constant measurement error, then the queues will always revert back to their original lot sizes and yields (Milt Friedman's plucking theorem), (Quantum Mechanics under coherence and constant uncertainty)

In the interim, some distribution chain, via technological improvement, is operating from an inventory network that is non-coherent with the system, the transaction rates at each point differ from the other, within measurement error. The system is in disequilibrium, incoherent

So, from the multi-good, multi-stage coherent queue model, all shocks, either errors or technical changes obey Uncle Milt's plucking theorem. The structure of supply chains return to their original structure and original transaction rates at each level. The difference ni state is that some owner, somewhere, by virtue of increasing economies of scale now owns part of the money supply system. And visa versa for a negative shock or an estimation error, the money system ends up owning part of a goods distribution network.