# Quantity theory of money

`kaal:entity:quantity-theory-of-money`

**Status.** derived

This node is assembled mechanically from the 4 claims that carry the concept tag `quantity-theory-of-money`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

4 claims across 1 works, 2019 to 2019.

**2019**

- [3402701-008](https://wulfkaal.github.io/claims/3402701-008) [mechanism/argued] -- 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.
  > QTM dictates that minting twice as much currency will halve its price, and burning half of the existing currency will double its price
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701
- [3402701-009](https://wulfkaal.github.io/claims/3402701-009) [condition/argued] *(failure mode)* -- The quantity theory calculations behind minting and burning hold only in the ideal case; in practice the success of a stabilization scheme depends on how the money is actually printed, distributed or burned.
  > Such calculations are only valid in the ideal. In practice, the scheme's success depends on how the money is printed and distributed or burned
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701
- [3402701-019](https://wulfkaal.github.io/claims/3402701-019) [mechanism/argued] -- Selling currency into a reserve when price is above the peg and buying it back with the reserve when price is below the peg yields an arbitrage profit, so a reserve can fund its own defense of the peg.
  > In the next paragraph we demonstrate the obvious result that selling the currency when the price is high to build a reserve, then buying the currency back with the reserve when the price is low will yield an arbitrage profit
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701
- [3402701-025](https://wulfkaal.github.io/claims/3402701-025) [definitional/speculative] -- Defining the energy of money as the product of economic momentum and velocity gives a basis for discussing economic frictions and for distinguishing genuine from artificial network energy, which is what guards against hot money instability.
  > With clearly specified definitions of energy we can discuss "frictions" in an economy due to inefficiencies, and we can distinguish "genuine" versus "artificial" network energy to guard against the instability arising from hot money
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701

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