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The term you're looking for is a store of value. USD absolutely does serve as a medium of exchange (have you ever bought something..?). It also serves as a stor
by dahfizz 5y ago
The term you're looking for is a store of value. USD absolutely does serve as a medium of exchange (have you ever bought something..?). It also serves as a store of value - Dollars themselves are valuable _because_ they can be used to purchase goods in the future. Economists understand this perfectly well.
The relationship between dollars and things depends on how many dollars and how many things are produced. Doubling the money supply while keeping the productive output of an economy the same will only half the value of dollars. You can increase the nominal dollars infinitely, but that doesn't change the productive capabilities of an economy.
- neilwilson 5y agoIt won't halve the value of the dollars that are stored, because they are not being spent. Only spent dollars cause price changes, and then only if the capacity to expand is exhausted. If I have a billion dollars in a cupboard prices won't change at all. More importantly if I have a billion dollars in a bank account prices won't change at all, because money in a bank account isn't available for anybody else to use. Economists struggle with the difference between a stock and a flow, which is why their accounting is terrible. Particularly their bank accounting.