Professional Documents
Culture Documents
Chapter 1-5-6-7
Chapter 1-5-6-7
Chapter 1-5-6-7
Money is a medium of exchange and store of value. Historically, harder money (high stock-
to-flow) has produced more stable and prosperous societies.
Problem of money: how to move value across time and space (1).
direct exchange (barter) challenge due to scale, location, and time frame —> indirect
exchange (2).
Money is:
Hardness (difficulty in producing new monetary units) needed to preserve value over time
(5).
Types of money are always competing, and higher stock-to-flow has won historically (6).
Single medium of exchange allows for economic growth and sophisticated production (8-
9).
Chapter 5: Money and Time Preference
Time preference (discount rate) is how we value the present compared to the future. It is
positive for us all (the present is more certain), but lower time preference leads to
investment and increases productivity. Time preference determines our choices and is
greatly influenced by the expected future value of money. Deflationary fiat money leads
directly to debt and lack of savings, and eventually to moral and family breakdown as a high
time preference mentality pervades all aspects of our thinking. Modern art and architecture
also exhibit the cultural decadence that results from soft money and high time preference.
Sound money: is chosen freely on the market for its salability, because it holds its
value across time, because it can transfer value effectively across space, and because
it can be divided and grouped into small and large scales. It is money whose supply
cannot be manipulated by a coercive authority that imposes its use on others.
Sound money:
Time preference: ratio at which individuals value the present compared to the
future; lower time preference allows for investment (delay immediate gratification to
produce capital goods)
Low time preference builds civilization (not just capital accumulation, but what capital
accumulation allows humans to achieve)
Unsound money leads to high time preference in both economic life (spend more and
save less) and moral life
Monetary Inflation
- A theoretically ideal money would have a fixed supply.
- This is not the case for fiat currencies which have lost 97% of value compared to gold
since 1971.
Artistic Flourishing
- Times of sound money have produced artistic flourishing.
Chapter 6: Capitalism's Information System