The lazy theory of Monetary Disequilibrium    

Don’t worry, I am not going to “Yeager” you a long lesson on Monetary Disequilibrium Theory.

Just a quick one.

Laziness reigns supreme in a monetary world. Laziness is the “ugly” counterpart of specialization.

You don’t just specialize in the things you like (or have an advantage). You also de-specialize in things you don’t (or that you are too lazy to perform).

Therefore laziness allows specialization. It allows innovations. It allows productivity. It allows the Wealth of Nations.

Let’s imagine now, we live in a world of Monetary Disequilibrium.

There is an excess of Money Demand or an excess of Money Supply.

If there is excessive money demand, by definition there will be a lack of aggregate demand for output. We will have a general depression. We shall have unemployment all around.

If there is excessive money supply, by definition there will be an excessive aggregate demand for output. We will have an (unsustainable) expansion. We shall have inflation all around.

Unemployment and Inflation are not bad things per se (despite what your casual economist would say).

Unemployment in a sector of activity may be a sign of a shift in consumer preferences.

Inflation in a sector of activity may be a sign of scarcity of the “good” exchanged.

They symbolize what the “market” wants and what the “world” provides.

But if we experience General Unemployment (excessive demand of money), we as workers will spend too much time trying to find a Job. Time we could, should and would be producing whatever the market demanded.

But if we experience a General Inflation (excessive supply of money), we as consumers will spend too much time trying to find a Reserve of Value (to “protect” us from inflation). Time we could, should and would be producing whatever the market demanded.

We shouldn’t be forced to desperately look for Jobs and Reserves of Value.

We should specialize in supplying whatever the market demands (and we are good at) and demanding whatever our distorted minds may want.

Don’t force us to do extra, unproductive work.

Give us Monetary Equilibrium.

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2 thoughts on “The lazy theory of Monetary Disequilibrium    

  1. Ricardo: I think this post works. A couple of minor comments:

    1. “If there is excessive money demand, by definition there will be a lack of aggregate demand for output.”
    I think the “by definition” part needs replaced by an explanation.

    2. “But if we experience a General Inflation (excessive supply of money), we as consumers will spend too much time trying to find a Reserve of Value (to “protect” us from inflation)”

    Do you have in mind something like the “shoeleather cost” of inflation?

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    1. 1. That’s the part I warned I was not going to “Yeager”, just tried to give my contribution
      2. Yes, something like that. Only functions in Demand led inflation though. If it’s an adverse supply shock, it will impoverish, giving them “other things” to worry, I guess

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