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Wednesday, December 2, 2015

How Money Disappears in a Fractional-Reserve Money System | Mises Daily

This is an excellent article by Dr. Frank Shostak. This article hits directly to the point about how Economics is not a quantitative science, but a qualitative science. This does not mean there is no place for math in the science of economics, it just means that human behavior simply is something that is difficult to quantify in terms of calculus.

The notion of raising or lowering the money supply and its direct relationship with prices comes from Irving Fisher's famous equation of exchange, as it is the foundation of Monetary theory. This theory is widely accepted in the world of economics, policy makers, and the like. Yet, it is not on solid footing, as Dr. Shostak proves here in this article.



How Money Disappears in a Fractional-Reserve Money System | Mises Daily

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