On Money and Inflation

32 Pages Posted: 13 Apr 2023

See all articles by Mehdi Chowdhury

Mehdi Chowdhury

Bournemouth University - Business School

Date Written: March 31, 2023

Abstract

The paper states that there is a need to go beyond our usual understanding of money e.g. physically, electronically or virtually expressed in term of monetary units like dollar, pounds, gold coins, bitcoins etc. Rather money is best conceptualised as the ability of a person to obtain goods and services from another person. This ability may originate due the access of a person to the money in usual sense (e.g dollars, pounds) but also via force, social norms, mutual negotiation, altruism or just biological. As such anything with the ability to obtain goods and services from another person is money. In a transaction, it is not just one party but both parties possess money as the transactions takes place due to the ability of both parties. Money therefore always existed and will exist as long as human beings remain as a mutually dependent species, and consequently money is universal. However, money as the ability has no universal type or representation, and is dependent on the context creating that specific ability. Inflation accordingly is caused by various types of ability chasing goods and services including the ability acquired through the possession of usually regarded money as dollars, pounds etc. The article provides the explanation of the post covid price hike from this perspective and points that the demand on the time of individuals for creating ability for various consumption needs to be also taken into consideration when addressing the inflation and the cost of living crisis.

Keywords: Money, inflation, ability, purchasing power, cost of living crisis

JEL Classification: E51, E64, B55

Suggested Citation

Chowdhury, Mehdi, On Money and Inflation (March 31, 2023). Available at SSRN: https://ssrn.com/abstract=4406437 or http://dx.doi.org/10.2139/ssrn.4406437

Mehdi Chowdhury (Contact Author)

Bournemouth University - Business School ( email )

D157a, Dorset House
Talbot Campus
Poole, BH12 5BB
United Kingdom

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