All posts tagged money

The role of expectations

In the previous post, we examined the Quantity Theory of Money. We have seen that increases in money growth rate lead to high inflation leading to higher speed and lower real money demand. This indicates that when it comes to a rise in the money supply growth rate, in the long run, the price increase will […]

The Quantity Theory of Money

In the previous post, we entered the fiat money system. Now we will examine the quantity theory of money. The fiat currency’s supply and demand are different from the commodity money model(silver or gold) we examined earlier. There are two reasons for this: In the fiat money system, the government has unlimited control over the […]

It’s all about appearances

In the previous post, I discussed the gold standard’s phase-out. When we used commodity money, we developed a medium of account (MoA) valid for both gold and cash. This could only occur if one was fixed to the other. Silver was phased out in the nineteenth century, and gold was phased out in 1968, following […]

The Long Phase-Out of Gold

In this and the next few posts, I will examine how money determines the price level. It seems quite appropriate to start with the silver standard first. Let’s start by assuming that our unit of account is a pound of silver or “PS” for short. We can define money using various criteria, including the medium […]