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The stock of the money commodity responds to demand and supply of the consumers and their preferences just as with any other good.
Claims to money can be used as money, but fraudulent claims to money would be illegitimate because two owners cannot own the same thing at the same time and the pseudo receipts would add to the money stock. The issuance of pseudo receipts cannot be regulated by profits as it would be on the unhampered market. Thus, there must be 100% reserves in banking.
Money can never neutral. Money is valued on preference ranks. Increasing the stock of money changes all these rankings. If you increase the supply of money, the purchasing power of each money unit will decline.
Clusters of entrepreneurial error cannot lead to boom-busts. And there cannot have been any monetary credit expansion on a free market.
An Alice J. Lillie Seminar. This lecture covers pp. 798-874 in the Scholar's Edition of Rothbard's Man, Economy, and State.
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