Money and the National Economy

A well-functioning monetary system is one of the pre-conditions for the coordination and wealth creation provided by the invisible hand. Money, a commodity or financial asset that is routinely traded and universally accepted, has been used by every known society throughout history. The universal use of money is a clue that there is something uniquely advantageous about conducting exchange via money rather than by barter. The oldest macroeconomic problem, as old as money itself, is inflation that occurs when governments or banks that issue the monetary commodity debase it. Part four considers money, inflation, and the business cycle as fundamental macroeconomic aspects of “how markets work.”