IDEAS home Printed from https://ideas.repec.org/a/fip/fedmqr/y1990iwinp19-26nv.14no.1.html
   My bibliography  Save this article

A suggestion for oversimplifying the theory of money

Author

Listed:
  • Neil Wallace

Abstract

This paper, originally published in 1988, argues that there is nothing special about government-issued money, that without restrictions of some kind, privately issued money would be a perfect substitute for it. The paper describes the type of intermediation this argument implies for a laissez-faire economy. One important implication is that there would be only one risk-adjusted rate of return; either all assets would pay a low return to match that on money, or money would pay interest. Another important implication is that open market operations would be irrelevant. The paper argues that the reason we don't frequently observe economies with such characteristics is that governments generally impose restrictions which prevent the private issue of money. However, the paper does examine some historical periods when restrictions seemingly were not imposed. And it concludes with some reservations about the oversimplifying suggestion. The paper is reprinted, with permission, from the Economic Journal.

Suggested Citation

  • Neil Wallace, 1990. "A suggestion for oversimplifying the theory of money," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 19-26.
  • Handle: RePEc:fip:fedmqr:y:1990:i:win:p:19-26:n:v.14no.1
    as

    Download full text from publisher

    File URL: http://minneapolisfed.org/research/qr/qr1413.html
    Download Restriction: no

    File URL: http://minneapolisfed.org/research/qr/qr1413.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Makinen, Gail E & Woodward, G Thomas, 1986. "Some Anecdotal Evidence Relating to the Legal Restrictions Theory of the Demand for Money," Journal of Political Economy, University of Chicago Press, vol. 94(2), pages 260-265, April.
    2. Lucas, Robert Jr., 1982. "Interest rates and currency prices in a two-country world," Journal of Monetary Economics, Elsevier, vol. 10(3), pages 335-359.
    3. John Bryant & Neil Wallace, 1984. "A Price Discrimination Analysis of Monetary Policy," Review of Economic Studies, Oxford University Press, vol. 51(2), pages 279-288.
    4. Sargent, Thomas J & Wallace, Neil, 1982. "The Real-Bills Doctrine versus the Quantity Theory: A Reconsideration," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1212-1236, December.
    5. Hugh Rockoff, 1986. "Institutional Requirements for Stable Free Banking," Cato Journal, Cato Journal, Cato Institute, vol. 6(2), pages 617-639, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Willem H. Buiter, 2003. "Helicopter Money: Irredeemable Fiat Money and the Liquidity Trap," NBER Working Papers 10163, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Monetary theory;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedmqr:y:1990:i:win:p:19-26:n:v.14no.1. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jannelle Ruswick). General contact details of provider: http://edirc.repec.org/data/frbmnus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.