Principle of nominal value

The principle that money of stable value is the most important prerequisite for the modern social and economic order, i.e., that the measuring property of money must be preserved at all costs. Because a distortion of this yardstick has above all the consequence that – the operational accounting becomes useless and with it the rational production process becomes inscrutable, – the control mechanism of the market (allocation mechanism of markets) is no longer able to allocate the scarce resources to the use with the highest profitability (the “best host”; the best possible allocation of resources), – the acquisition of income and wealth based on the merit principle becomes more difficult, – recipients of social assistance suddenly fall below the minimum subsistence level, because it takes some time before the social administration can adjust support payments to the increased prices, and in general – redistributive effects occur, which in turn trigger tensions in the social fabric, mainly through the desire to share in apparent gains. – Each of the aforementioned consequences entails numerous other harmful processes. From these facts, economic policy theory rightly derives the “primacy of monetary policy.” – See money, moral, money ownership, money neutrality, long-term, money purpose, inflation, market mechanism, menu costs, money-matters theorem, structural upheaval, valorization suit.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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