Before watching the video lecture, think of any instance where you provided a service and were compensated with nonmoney. For example, an apartment groundskeeper who gets "paid" by receiving free shelter from the apartment owner.in exchange for his services. In the example, the groundskeeper and apartment owner each possess something the other wants, so they exchange them directly without any monetary medium. This measure is essential to understanding how different goods can help solve the problem of coincidence of wants across time, and can help us understand which forms of money survive. As you watch the video lecture, focus on analyzing how goods, time, and scale exist across trades and how money alleviates all of these by offering one universal medium. As with the previous units, this invention also increases the value of human time by allowing humans to better economize, allowing for larger increases in productivity. As will be discussed in the next unit, modern economic calculation is only possible with money acting as the numeraire for all transactions. This is what makes entrepreneurship possible, and Dr. Saifedean introduces the idea before more in-depth discussion in the next unit. After watching the lecture in its entirety, reflect on the long-term implications of the function of money. For example, if your money is expected to depreciate, are you more likely to save, or less?
- The only way around the problem of coincidence of wants is to engage in indirect exchange.
- The chemical properties of gold give it the highest stock to flow ratio of all metals, making it the one least likely to be subjected to high amounts of inflation.
- The quantity of money does not matter because money is acquired for its purchasing power.
- Money is one good whose supply increasing doesn't offer any benefits.
- Money's utility diminishes less than any other good.
- By solving the problem of coincidence of wants, money allows for trade with a much larger number of people.
- Money allows humans to transfer value to the future, which decreases the uncertainty of the future.