Easy money trap

If you choose to store your wealth in easy / not-hard good with a low stock:flow ratio, the producers of the good could easily flood the supply. This depresses price and devalues the good, destroying its Salability across time and thus is role as a [[store-of-value | store of value]].

Any store of value will have its supply increased - if this is too easy, the wealth of those using it as a store of value will be destroyed.

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  • money

    For a good to assume a monetary role, it must be costly to produce or otherwise restricted in its production, thus opposing the Easy money trap and maintaining the value of those who save in it. Whenever a medium of exchange “softens” and begins to lose its monetary status, it will be replaced by another medium of exchange with a better stock:flow ratio. This has happened repeatedly throughout history.

  • Unit of Account

    market economies depend on prices and their accuracy, their signal of scarcity of a given good. Easy money trap obscures this data by messing with supply.

  • Store of Value