The Size of the Social Unit: Money

#economics #smallstates #money

Commodities are impossible to print. Inflating the money supply is much more difficult. A large state can institute paper as a medium of exchange. A small state would have a difficult time. Particularly, when there’s a multitude of small states. There will be a tendency to use a commodity money the more states there are. A multitude of paper notes would essentially place them back in a state of barter or partial barter.

Issuance and acceptance are two different things. Of course, a small state can issue paper notes, but that doesn’t mean they’ll be accepted. Even if it’s fiat money, the fiat only exists in that area. The other states don’t have to accept it. That state won’t be able to trade beyond its borders. So, they’ll have to adopt a commodity standard to purchase goods. This will be the tendency until the entire world uses commodities.

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