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Question about relative value of total monetary supply
100 sats \ 2 comments \ @ok 18 Jun 2022 bitcoin freebie
In an economy using a hard money standard, is there a way to express the value of the total supply of the money? For example, how would it relate to total non-monetary wealth? Or perhaps the present value of all future production of goods? Does velocity come into play somehow?
If there isn't a strict equivalence relation, is there a compelling lower or upper bound? Or is the question unanswerable, perhaps due to the distributed nature of an economy?
Does the answer change if the assumption of hard money is removed?
I'm just as interested in methodologies for approaching the question and any assumptions that might be required to arrive at a particular answer. (I assume there isn't an obvious, well-understood answer already out there.)
Is anyone aware of any literature addressing the topic?
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300 sats \ 0 replies \ @telcobert 24 Jul 2023
In an economy using a hard money standard, is there a way to express the value of the total supply of the money?
The value of the money depends on both, the supply and the demand for money, so no. You will just know the quantity, its value is the inverse of whatever commodity you wish compare, at marginal utility
For example, how would it relate to total non-monetary wealth?
There is no relation to a stock number, money demand is mostly a function of expected transactional needs, flow.
Or perhaps the present value of all future production of goods?
Certainly not. Money is a present good.
Does velocity come into play somehow?
No, velocity is merely a descriptor.
If there isn't a strict equivalence relation, is there a compelling lower or upper bound?
See answer 1.
Or is the question unanswerable, perhaps due to the distributed nature of an economy?
Kind of, because it is the subjective money demand of individuals which determines aggregate money demand. The other reason is that there is money and claims to money which both serve as medium of exchange. In a fiat system, they are indistinguishable, in a gold system there are banknotes, in a bitcoin system there are the proposed bitcredits.
Does the answer change if the assumption of hard money is removed?
No.
Is anyone aware of any literature addressing the topic?
There is still no better and more rigorous than The Theory of Money and Credit by Ludwig von Mises,
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0 sats \ 0 replies \ @telcobert 24 Jul 2023
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