Research Series

Theory of Interest and Prices in Paper Currency Part III (Credit)

In Part I, we looked at the concepts of nonlinearity, dynamics, multivariate, state, and contiguity. We showed that whatever the relationship may be between prices and the money supply in irredeemable paper currency, it is not a simple matter of rising money supply –> rising prices. In Part II, we discussed the mechanics of the […]

Theory of Interest and Prices in Paper Currency Part II (Mechanics)

In Part I, we looked at the concepts of nonlinearity, dynamics, multivariate, state, and contiguity. We showed that whatever the relationship may be between prices and the money supply in irredeemable paper currency, it is not a simple matter of rising money supply –> rising prices. Here is a fitting footnote for Part I. I […]

Theory of Interest and Prices in Paper Currency Part I (Linearity)

Linear

Under gold in a free market, the theory of the formation of the rate of interest is straightforward[1]. The rate varies in the narrow range between the floor at the marginal time preference, and the ceiling at the marginal productivity. There is no positive feedback loop that causes it to skyrocket (as it did up […]