kaal:claim:3402701-008

Under the quantity theory of money, minting twice as much currency halves its price and burning half of the existing currency doubles it, which is the mechanism by which a supply rule can theoretically stabilize price.

Source quote, verbatim

QTM dictates that minting twice as much currency will halve its price, and burning half of the existing currency will double its price

From

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019), 3.1 CURRENCY MINTING AND BURNING, p. 16
https://ssrn.com/abstract=3402701 · source PDF

Cite as

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701

Holds when

quantity theory of money holds
price measured as an average across exchanges

Classification

mechanismsupport: arguedeconomics

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