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gfs543
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We Don't Need a Central Bank to Deal with Changes in the "Demand for Money" - Frank Shostak -

Frank, this refutes the most destructive economic fallacy in the world today, which is that the money supply must keep pace with economic growth. As you wrote,

Contrary to other goods, an increase in the demand for money implies an increase in the demand to employ money to facilitate transactions. This means that an increase in the demand for money by 5% is NOT going to absorb an increase in the supply of money by 5%. [my caps]

The increase in the demand by 5% implies that people’s demand for the services of money has increased by 5%. An increase in the supply of money is not going to be taken out of the economy because of the corresponding increase in the demand for money.

Consequently, an increase in the supply of money to accommodate a corresponding increase in the demand for money is going to set in motion all the negatives that an increase in the money supply does.

Great job! A must-read for everyone on this site!

Commented 964 days ago

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Beginning of the headline :Historically, many different goods have been used as money. On this, Ludwig von Mises observed that, over time, . . . there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money.1 Similarly, Murray Rothbard wrote in "What Has Government Done to Our Money," Just as in nature, there is a great variety o... Read More

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