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Perhaps your error is thinking of currency as a part of the natural world, rather than what it really is, an invented medium of exchange. In order for it to wor
by AmericanChopper 8y ago
Perhaps your error is thinking of currency as a part of the natural world, rather than what it really is, an invented medium of exchange. In order for it to work in its intended fashion, it must have some scarcity. It can’t be so scarce that it hinders growth, and it can’t be so abundant that it causes too much inflation. It’s not the only means of exchange, it’s simply the most efficient one, and the role of the central bank is primarily to maintain appropriate balance between the forces that push and pull on the money supply.
- bachbach 8y agoI realize money is an abstraction - what I'm saying is that the model - its mapping onto real activity is questionable to people besides hippies. Usually when a small town or community provide their own currency there is an surge of economic prosperity. Eventually central banks act as a leveler and the connection between small businesses like startups and the macroeconomy is so attenuated it might be compared to those projects in physics to reconcile small physics and big physics. The topic is much more mysterious than you're allowing for!