Debunking Economics - the podcast The cash only economy where economics works
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Jan 1, 2025 Step into the fictional island of Cornucopia, where gold coins are the only currency and banks are banned from lending. Discover how traditional economic theories struggle in this cash-only realm while bringing to light the challenges of inflation and resource depletion. Delve into the idea that money is more about trust than gold, and learn how investment can spark growth even in constrained environments. Plus, explore personal finance tips to tackle unwanted subscriptions, showing that even in a simplistic economy, complexity abounds.
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Friedman's Helicopter
- Milton Friedman's "Optimal Quantity of Money" describes a world with a fixed money supply.
- A helicopter drops more money, causing temporary increased spending but ultimately just inflation.
Growth in a Coin-Only Economy
- In a system with only gold coins and no lending, economic growth depends on increased velocity of money.
- This can happen if people work faster or if new money is injected.
Money Velocity
- Milton Friedman believed money velocity was constant, but data shows it's volatile.
- It rises in booms, falls in slumps, and has been trending down over time.