On the optimum quantity of money

It is pretty well established within Austrian economics that the optimum quantity of money is whatever level is established at any given time. The logical implication of this claim is that any amount of the commodity that intermediates trade will do as well as any other in acquitting this task. This being the case, there is no social or even private gain to be obtained by anyone adding to the money stock. The present paper challenges this view, but from within the praxeological tradition. That is, we shall argue that although prominent Austrian economists have indeed made this argument, they are incorrect from their own basic perspective, which is shared in full by the present authors. Our thesis, in contrast to theirs, is that “more is better,” or, more strictly speaking, at the very least it is possible that additional stocks of money can make a positive contribution to economic welfare. Given that we are making a frontal attack on economists with whom we agree on virtually all other issues1 in the dismal science, it behooves us to be very careful in documenting the charge we are about to bring. Accordingly, we quote quite fully from several leaders of the Austrian School, in order to obviate any possible misconstruction of their position. But before we introduce our extensive quotations from Mises and Rothbard, for these are the economists against whose views we shall be contending, let us mention a possible misinterpretation of our own position, and attempt to obviate it.