--- john hull <[EMAIL PROTECTED]> wrote: > Some sources of info claim that > currencies can be made to be resistant/immune to > inflation.
Yes, if the unit of account is an hour of unskilled labor or a commodity. > If we use an > Hours model, then the currency is worth 1 hour of > (anybody's) labor _or_ $10 in terms of real dollars. > Next year, it is worth one hour or $9.70, let's say, > in real dollars. So if the value in dollars is > declared by fiat, then it needs to be changed > periodically to maintain purchasing power. The local currency unit is still the hour, so it does not matter how hours exchange with dollars or euros. They are trading an hour of labor for a pound of carrots regardless of the exchange rates with fiat money. Fred Foldvary ===== [EMAIL PROTECTED]
