Four Principles for a Base Money Regime

20 Pages Posted: 18 Nov 2019

See all articles by William J. Luther

William J. Luther

Florida Atlantic University; American Institute for Economic Research

Date Written: October 30, 2019


What does an ideal base money look like? I maintain that it is (1) stable, (2) demand-elastic, (3) global, and (4) incentive-compatible. I conclude that, since most real world monies fall short of the ideal on one margin or another, one must consider the trade offs when ranking the available alternatives.

Keywords: base money; bitcoin; fiat money; gold; gold standard

JEL Classification: E42, E51, E52, E58

Suggested Citation

Luther, William J., Four Principles for a Base Money Regime (October 30, 2019). AIER Sound Money Project Working Paper No. 2020-02, Available at SSRN: or

William J. Luther (Contact Author)

Florida Atlantic University ( email )

777 Glades Road
Boca Raton, FL 33431
United States


American Institute for Economic Research ( email )

PO Box 1000
Great Barrington, MA 01230
United States


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