Optimal money-creation in ‘pure-currency’ economies: a conjecture∗

In a pure-currency economy, money is the only durable object and people have private histories so that they cannot be punished individually in the future for current actions. In many such economies, trade is enhanced through the use of money and taxation is not feasible. For economies of that kind in which the distribution of money is a state variable, the conjecture is that there are transfer schemes financed by positive money creation that improve ex ante representative-agent welfare relative to what can be achieved holding the stock of money fixed.