Money

Any amount of money in an economy is ‘abundant’ provided it can be divided and combined according to the needs of the economic actors. That’s not the kind of abundance I’m referring to in the title. I’m instead referring to monetary inflation. More than the absolute stock of money, what’s relevant is the rate at which it is increasing. The Medium of Exchange Problem As discussed in Price and Money, a price is simply the exchange rate between two goods/services. Money is a good that acts as a medium of exchange, negating the need for double coincidence of wants. Due to the prevalence of money, Adam can sell his service to ‘buy’ money, and then ‘sell’ the money to buy goods he wants. This renders unnecessary for the sellers of those goods to desire Adam’s service before Adam may have his wants met. ...

Central bankers and economic textbooks will have you believe that economic inflation is “an increase in the general price levels.” Due to inflation, your money is worth less than before—its purchasing power lower than it used to be. Capitalism, fall in supply, rise in demand, etc. are blamed. Everything but the main culprit is discussed. This is an instance of exclusionary detailing. Learn to see through the smoke and mirrors. ...

A price is simply a ratio of something in terms of something else. It need not necessarily be in terms of a fiat currency. The price of a certain watch may be ten pairs of a certain brand of shoes, or equivalently, an hour of consulting service of a certain expert, and so on. The ratios in terms of some goods become more prevalent due to their characteristics: durability, recognizability, divisibility, scarcity; these goods begin to acquire monetary recognition as individuals start accumulating them for the express purpose of exchanging them (as opposed to consuming them). These goods are traded more frequently than other goods due to their utility as media of exchange. The most traded good, thus, emerges as money, and market participants find it convenient to denominate prices in terms of this money, which, historically, has been gold. ...