By Irving Fisher
In economics, cash phantasm refers back to the tendency of individuals to consider foreign money in nominal, instead of genuine, phrases. this can be a fallacy as glossy fiat currencies haven't any inherent price and their actual worth is derived from their skill to be exchanged for items and used for fee of taxes. The time period was once coined by way of John Maynard Keynes within the early 20th century, and Irving Fisher publication, the money phantasm, is without doubt one of the most crucial works at the topic.
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Additional info for The Money Illusion
Nor could there be any change in the general level of prices if these two streams were both to grow greater at the same rate, nor if they were both to grow less at the same rate. This situation, where money and goods run along together, or their streams ebb and flow alike, may be called the "normal" one. That is, the flow of money, to accommodate business, keeps pace with the growth or ~hrinkage of business. " But what if the two circulations do not thus. keep pace? For instance, suppose that the circulation of goods remains the same year after year (say at 30 billion tons) but that the circulation of money increases (say to 1200 billion dollars).
They envied the foreigner for having what they now falsely assumed was a stable money. One result was a desire to "get back" to 30 ~HE MONEY ILLUSION such a gold standard themselves; that any standard still better might be obtained was an idea never thought of. Thus the very instability of the paper mark, as soon as discovered, blinded them to the instability of the gold standard. The fact that gold was so very much more stable than unregulated paper money caused it to be idealized. ed ~learly show.
In what sense, then, should a dollar be fixed, if not in weight? Evidently, in buying power. We use a dollar as a unit of value, or buying power, not as a unit of weight. We have other units of weight, the pound, ounce, grain, gram. We use these units of weights for weighing. But the dollar is a unit of weight never used for weighing. 22 grains of silver or copper is not a dollar. 22 grains of gold is a dollar and even then, while the grain means to us weight, the dollar does not. We never think of 18 THE MONEY ILLUSION it in any such way.