Leland Yeager offers an illuminating discussion of a serious problem that has historically plagued monetary theory and continues to do so to this day: the failure to clearly distinguish between the individual and the overall viewpoints when analyzing monetary phenomena.
It is an error in economics, as prevalent as it is patent, that all commodities, at a definite point of time and in a given market, may be assumed to stand to each other in a definite relation of exchange, in other words, may be mutually exchanged in definite quantities at will. It is not true that in any given market 10 cwt. of one article = 2 cwt. of another = 3 lbs. of a third article, and so on.
[This article is excerpted from volume 2, chapter 10 of An Austrian Perspective on the History of Economic Thought (1995).
[This article is excerpted from volume 2, chapter 10 of An Austrian Perspective on the History of Economic Thought (1995). An MP3 audio file of this chapter, narrated by Jeff Riggenbach, is available for download.]
While it is important that attention be paid to the slow recovery and to “What is holding the economy back,” the two most recent boom-bust episodes should have more clearly focused attention of economists on the need for significant monetary reform.
