I don't understand you porky; Out of the gate you say there is a society with X amount of money in circulation and then go on to say that this hypothetical society produces exactly X in value annually. Then you turn right around and say that some how Capital is reinvested and this coincides with a rise in productivity. In order for capital to be capital it needs to double its value; Your hypothetical falls apart by the very impossibility of capital being a stagnating system, and, while we are on that subject, in order for productivity to rise you need to do one of two things, you need to invest more capital into innovation and drop the socially necessary labor time, which, means cheaper goods, or, increase the amount of exploitation, meaning, raising the intensity of work. In the modern economy you really have only one option and that is investing in new innovations and R&D. Because a machine doesn't need to be paid you can now sell your product for less because the fundamental amount of labor you actually have to pay people to do has now dropped significantly. Soon, your competition will follow suit. Eventually this will lead to a spiral in which profit margins are at or nearing zero because in the myopic race to make profits, over all, the capitalist class is devaluing the money supply. This will lead to a crisis; the crisis of over production that you touch on, much like what I stated above with the Falling rate of profit, is not a totalizing effect. It;s not just one day you wake up and the economy implodes. That's not how capitalism functions.
What does happen though is that, again, with the increase in innovation over time more and more can be siphoned out of the commons and into the hands of the few wealth plutocrats and bourgeois. Quite literally, the harder we work the more and more impoverished we become. Technological innovation means less jobs and the less people you have working and cycling capital through the economy the less people you have buying your shit.
That was marx's crisis of over production, and, again, it wont happen over night. It is a dialectical and incremental process. You see things in absolutes porky.