The Smoke and Mirrors of Demand for Money The establishment economists love to argue that a growing economy requires an ever-growing money supply. Their logic? More economic activity equals a higher demand for money, and if the Fed doesn’t pump out fresh dollars, prices will fall, destabilizing the economy and triggering recession or depression. It sounds reasonable—until you realize it’s based on a toxic mix of half-truths and outright manipulation. The argument ignores a crucial distinction: demand for money isn’t like demand for apples or houses. You don’t “consume” money. As Murray Rothbard put it, “Money is unproductive; it’s dead stock.” Its sole purpose is to facilitate exchange. You demand money not because you love holding it, but because you…
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