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Transactional Money

 

Ah, back to one of my favorite topics ... money. There are a lot of interpretations as to what exactly money is. Is gold the only real money? Are Federal Reserve notes money? Are baseball cards a form of money? What about the value of my investment portfolio -- since the value is in dollars, does that make it money? If I had to guess, your answers were: Yes, Hell-No, No, and Maybe. Was I close?

 

Today I'd like to explore a different perspective on money, and for ease we'll call it "Transactional Money." This concept is of special importance when we talk about price stability in an economy. We're also going to begin refining our understanding of the various money aggregates (M1, M2 etc.) and how the amount of "money" in the economy is calculated.

 

When you or I go to buy goods or services, how do we pay? If you're ... Log in or subscribe to continue reading.


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