Price Theory of Monies, from Global History
Abstract
This essay suggests replacement of all current monetary theories with a “Price Theory of Monies” (PTM). The PTM specifies four monetary functions: (1) Medium of Exchange, (2) Unit of Accounting, (3) Store of Value, and (4) Measure of Relative Values. The first three functions correspond with macroeconomic textbook counterparts. The Measure of Relative Values function, in contrast, corresponds with money in microeconomic analysis. Combination of all four monetary functions yields a theory without need for the microeconomics-macroeconomics dichotomy characteristic of conventional economic theory since the early 20th century. It is impossible for any single money to simultaneously fulfill all four monetary functions because the “Measure of Relative Value” is restricted to an intangible money, whereas the other three monetary functions require tangible monies. Application of the PTMs to monies today reveals that monies and credit instruments are distinct. In addition, non-credit-monies are distinct from credit-monies. Finally, trust plays a critical role in establishment and maintenance of market values of all tangible monies as well as market values of all credit instruments.
About the Author
D. O. Flynn
Pacific World History Institute & University of the Pacific
Russian Federation
Russian Federation
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Review
For citations:
Flynn D.O. Price Theory of Monies, from Global History. Review of Business and Economics Studies. 2017;5(2):36-46. (In Russ.)
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