Shoe-leather costs

When inflation occurs, economic agents are forced to bank more frequently by going to the bank counter or logging on to the bank’s data processing system to carry out their money transfers (essentially, shoe-leather costs refer to the time and effort people take to minimize the effect of inflation on the eroding purchasing power of money. People wear out their shoes on the way back and forth to the bank, so to speak, trying to protect the value of their assets). At very high inflation rates, this can lead to a collapse of the monetary cycle. – See monetary adjustment costs, inflation, market mechanism, menu costs, nominal value principle, Phillips theorem.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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