Money and Its Purchasing Power

This completes the study of money and of the effects of changes in monetary relations on the economic system. Like all commodities, money has its own supply and demand and price: purchasing power. Everyone deals in money. The annual production of money is small compared to the total stock of money.

Earning money is the name for buying money. The sole purpose of buying money is to exchange it in the future for other goods and services. Increases in the money supply yield no social benefits, unlike increases in other commodities. More money does no good if its purchasing power for goods is correspondingly diluted.

Keynesians confuse the notion of saving with hoarding.  They also fear deflation and its falling prices. There are four components of the natural rate of interest.

An Alice J. Lillie Seminar. This lecture covers pp. 755-798 in the Scholar’s Edition of Rothbard’s Man, Economy, and State.