Category Archives: Definitions

Monetary Definitons

Unfortunately in the world of economics many of the key definitions are now surrounded by confusion, misrepresentation, and more often than not, a complete 180 degree turn on what they used to be defined as. This page is an attempt to clarify the context behind some of my arguments. Many of these definitions are close to or from the Austrian School of Economics.

Money – is a commodity, which is limited in quantity, and iis demanded by the free market to be used as a medium of exchange.

Money should not:
– be determined by government decree
– be fixed, but should be left flexible to be able to respond to consumer demands.

Purchasing Power – the price of money. The relative buying power of the monetary unit has relative to other goods.

Inflation – is a considerable increase in the quantity of money in circulation, which confers no general social benefit.

Inflation is not: – the increase in the price level of goods and service (this is the effect, not the cause)

Inflation is favoured by Governments because:

– it can acquire revenue for the state when increasing taxation is unpopular (inflation is a hidden tax)

– inflation increases the role of government in our society, and people’s reliance of government assistance.


Deflation is not:

What Deflation should do:

Deflation can only occur after a period of inflation. Deflation should be embraced!



Money substitutes

Usury – charging interest on money. The level of interest is manipulated ad libitum (at will) by government and the banks.