Economics Dictionary of ArgumentsHome
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| Money substitutes: Money substitutes are assets or instruments that function as a temporary replacement for money in transactions. Examples include checks, vouchers or promissory bills. They are not money themselves but facilitate the exchange of goods and services by representing a claim on money held elsewhere, such as in a bank account. See also Money, Banks, Credit, Money supply._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Money Substitutes - Dictionary of Arguments
Rothbard III 804 Money-substitutes/Rothbard: Since money-substitutes exchange as money on the market, we must consider them as part of the supply of money. It then becomes necessary to distinguish between money (in the broader sense) - the common medium of exchange - and money proper. Money proper: Money proper is the ultimate medium of exchange or standard money - here the money commodity - while the supply of money (in a broader sense) includes all the standard money plus the money-substitutes that are held in individuals' cash balances. In [earlier times], gold was the money proper or standard money, while the receipts - the demand claims to gold - were the money-substitutes. >Banks/Rothbard. Rothbard III 805 (…) as long as all money-substitutes are full money certificates, an increase or decrease in the money-substitutes outstanding can have no effect on the total supply of money. Only the composition of that supply is affected, and such changes in composition are of no economic importance. Pseudo receipts/VsMoney substitutes: However, when banks are legally permitted to abandon a 100-percent reserve and to issue pseudo receipts, the economic effects are quite different. We may call the money-substitutes that are not genuine money certificates, uncovered money-substitutes, since they do not genuinely represent money. The issue of uncovered money-substitutes adds to individuals' cash balances and hence to the total supply of money. Uncovered money-substitutes are not offset by new money deposits and so constitute net additions to the total supply. Any increase or decrease in the supply of uncovered money-substitutes increases or decreases to the same extent the total supply of money (in the broader sense). Money supply: Thus, the total supply of money is composed of the following elements: supply of money proper outside reserves + supply of money certificates + supply of uncovered money-substitutes. Certificates: The supply of money certificates has no effect on the size of the supply of money; an increase in this factor only decreases the Size of the first factor. The supply of money proper and the factors determining its Size have already been discussed. It depends on annual production compared to annual wear and tear, and thus, on the unhampered market, the supply of money-proper changes only slowly. >Monetization of debt/Rothbard, >Bank Reserve/Rothbard, >Money market/Rothbard._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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