Time Preference and Money: A Dynamic Reappraisal
نویسنده
چکیده
Friedman (1950) championed a shift from a fixed exchange rate regime (Bretton Woods) to a world of central bank issued floating currencies. Following Menger (1892) and Mises (1971), we see that the exchange-value of money lies in the original use-value of a commonly accepted medium of exchange. However, actors also incorporate their inter-temporal preferences in choosing a money. Not only their present exchange needs, but also their expected future ones will dictate what type of money is preferred. As exchange-value is only partly determined by the underlying base-commodity, we see that differing values for the same nominal currency may arise on the free market. To accommodate this factor, and stabilize the financial system, fluctuating rates are a necessary condition.
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