Popular commentators and politicians often express loud opinions about exchange rates and balance of payments. As Dr. Frank Shostak writes, the facts differ widely from popular perception.
If Bukele really wants monetary freedom for El Salvador, he should not have presented them with what, effectively, is a government handout for bitcoin hodlers and the companies behind the Strike app and other potential intermediaries.
The impossibility theorem, developed by Nobel-winning economist Robert Mundell, paints a false tradeoff between the free movement of capital, fixed exchange rates, and effective monetary policy. Under a gold standard, all three are a possibility.
In this short essay recently found in the Mises Institute Archives, Mises goes over the basics of monetary theory and shows why the concept of velocity of circulation is useless for understanding changes in the purchasing power of the monetary unit.
