As I read “What has Govt Done to Our Money”, I am confused by the concept of the miser’s effect on the money supply. While I understand that a higher demand for money will result in lower prices, it seems as if there would be a benefit to hoarding. Would it not be beneficial to hoard money, causing a decrease in prices, and then use this hoarded money to buy cheaper goods.
For example:
The miser sells television sets and has an inventory of 10 tv sets. If the current price for a TV set is $100, could the miser not sell his tv’s for $1000 and when prices decrease, buy them back for say, $50 a set? Wouldn’t the miser now have 10 tv sets and $500?
I’m not sure I understand your example. If the current price for a TV set is $100, then probably no buyer could be found who would pay $1000 for the miser’s TV. If the miser owned all TV’s in existence, and no one else could produce one, then he could probably sell the first TV for a lot of money. But subsequent ones would drop in price - the marginal utility of the TV’s entering the market will keep diminishing.
Likewise, if the miser is skilled enough to hoard such a vast sum of money that it becomes a significant fraction of the total amount of money in existence, then the purchasing power of the money will appreciably drop as he releases it into the market.
But if the miser exchanges ALL of his money for TV’s rapidly enough - making money cheap and TV’s scarce - before the market can make the price adjustments, couldn’t he turn a huge profit? Could the free market put a stop to these kind of swindles? Perhaps some might label him as a troublemaker and refuse to do business, but individual participants would have a hard time refusing his offers.
Edit: if the miser is known to have accumulated so much money that he can disrupt the economy in that way, that would also severely impact the confidence in using that money as a medium exchange.