With the passage of House Bill 195 into law, the State of Louisiana has banned the use of cash in all transactions involving secondhand goods. State representative Ricky Hardy, a co-author of the bill, claims that the bill targets criminals who traffic in stolen goods.
4. Prices and Consumption
1. Money Prices
WE HAVE SEEN THE ENORMOUS importance of the money prices of goods in an economy of indirect exchange. The money income of the producer or laborer and the psychic income of the consumer depend on the configuration of these prices. How are they determined? In this investigation, we may draw extensively from almost all of the discussion in chapter 2. There we saw how the prices of one good in terms of others are determined under conditions of direct exchange.
2. Determination of Money Prices
Let us first take a typical good and analyze the determinants of its money price on the market. (Here the reader is referred back to the more detailed analysis of price in chapter 2.) Let us take a homogeneous good, Grade A butter, in exchange against money.
The money price is determined by actions decided according to individual value scales. For example, a typical buyer’s value scale may be ranked as follows:
3. Determination of Supply and Demand Schedules
Every money price of a good on the market, therefore, is determined by the supply and demand schedules of the individual buyers and sellers, and their action tends to establish a uniform equilibrium price on the market at the point of intersection, which changes only when the schedules do.8 Now the question arises: What are the determinants of the demand and suppl
THE AUSTRIAN: Why did you decide to apply for and attend Mises University?
AARON ENSLEY: Honesty compels me to admit that my primary motivation for attending Mises University was to receive the final “seminar” credit that I needed to graduate from the University of Detroit Mercy. However, independent of this credit, I was in fact eager to attend Mises University because I was familiar with many of the speakers and very much looked forward to hearing them speak and getting the opportunity to meet them personally.
5. Money Income and Money Expenditures
In a money economy, each individual sells goods and services that he owns for money and uses the money to buy desired goods. Each person may make a record of such monetary exchanges for any period of time. Such a record may be called his balance of payments for that period.
6. Producers’ Expenditures
The previous section concentrated on the case of Mr. Brown, whose entire money expenditures were on consumers’ goods. His money income, aside from the sale of old, previously produced goods, came from the sale of current productive labor services. His expenditures were purely on consumption; his income was derived almost solely from his production of labor services. Every man must be a consumer, and therefore this analysis of consumer spending applies to all persons. Most people earn their income from the sale of their labor services.
7. Maximizing Income and Allocating Resources
We have seen that, in the money economy, other things being equal, men will attempt to attain the highest possible money income: if they are investors, they will try to obtain the largest net return; if they sell their labor service, they will sell it for the largest return. The higher their money income, the more money they will have available for expenditure on consumers’ goods. Before we proceed to a deeper analysis of the money economy, it is important to examine the “other things being equal,” or the ceteris paribus, qualification.
3. The Pattern of Indirect Exchange
