Demand curves slope in a downward direction. This means that the higher the price, the less of an item, or good, or service will be sought. The more roadblocks, hurdles, thumbtacks, placed in the way of any given action, the less likely it will occur. Economists do not agree on many things, but on this insight there will be nary a dismal scientist who will not acquiesce.

Yet there are several public policies in place that are incompatible with this commonsense understanding.

Imagine an articulate chief lemming bragging that not only had his followers jumped off a cliff, but that they had done so in far greater numbers than any other slice of the rodents. This is the position occupied by the US regarding testing for COVID-19.We’ve done more testing than any other country and bragged a lot about doing so; but no one seems to have survived to give a proper interpretation of the results.

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One of the most perplexing displays of cognitive dissonance this year is the strong support for a large state can be found within the various protest movements that are targeting the issue of law enforcement misconduct. Logically, groups opposing police misconduct should also be strong supporters of the libertarian ideology. However, this does not appear to be the case.

According to popular thinking, not every increase in the supply of money will have an effect on the production of goods. For instance, if an increase in the supply is matched by a corresponding increase in the demand for money, then there will be no effect on the economy. The increase in the supply of money is neutralized, so to speak, by an increase in the demand for money or the willingness to hold a greater amount of money than before.

What do we mean by demand for money? In addition, how does this demand differ from the demand for goods and services?