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supplied and demanded. The ERE does not rule out all change; the needs and preferences of particular individuals may change and given individuals may be born, age, and die. The model allows for this so long as the total magnitudes of all goods traded always remain the same. For example, for every individual who dies, another individual or multiplicity of individuals would need to assume his set of economic preferences.

As an imaginary model, the ERE is beset by several internal contradictions. Austrian Economics is rooted in the action axiom, and action inherently implies a human being's pursuit of goals in the face of uncertainty. Had the future been fully known to the acting man and recognized as unalterable by any of his actions, he would have no stimulus and no reason to act. An action implies the capacity to alter the course of the future in accord with one's purposes. A man living in an ERE, however, will not be able to alter a perfectly known economic future, and will thus have no incentive to act economically to produce the goods that are regularly circulated through the economy. Without action, furthermore, there cannot be any economy at all.

Additionally, the ERE's lack of uncertainty implies that the economic actors therein will have no need for the use of money. The principal purpose of holding cash reserves is to guard against uncertainty and be prepared to respond to unforeseen future events. If no such events can occur, then the economic actor ceases to have an interest in holding cash reserves. Since this is true of every economic actor in the ERE, this economy must lack money altogether. It becomes instead a highly complex network of direct and indirect barter-exchanges, a fact clashing with the purpose of the ERE as a tool for analyzing the monetary returns on various factors of production.

Despite these shortcomings, however, the model of the evenly rotating economy can be useful in delineating the distinction between interest earned from the use of capital goods and profit gained from entrepreneurial activity. In the ERE, time still passes and every economic actor has a positive rate of time preference, valuing a present satisfaction more than that same satisfaction in the future. A capitalist in the ERE is able to exercise a comparatively low time preference by trading present consumption for capital goods, which are means to greater consumption in the future. The capitalist, preferring more future goods to fewer present goods of like nature,

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