5. Money | Malavika Nair

First, the classical, functional definition of money as unit of account, means of exchange and store of value is given and discussed. Then Carl Menger's theory of the emergence of money as an evolutionary process to solve the double coincidence of wants is outlined and state theories of money are dismissed. Afterwards issues of circular reasoning regarding the value of money and goods in a subjective valuation framework are discussed referring to Mises' temporal solution. Lastly, the power of banks to create money substitutes in a system of fractional reserve banking and the role of central banks in fiat money systems is criticized and contrasted with metalist money systems.

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