Quantity Of Money

The quantity of money does not need to be adjusted to suit the size of the population. Prices and wages in the economy adjust to the known value of good money, like money exchangeable for a precious metal.

An ounce of gold was something like $30 in 1930. Someone with ten ounces of gold could buy a Ford Model T for three hundred dollars in 1930.

Today, using the exact same quantity of gold, ten ounces at around $1100 an ounce, a person could buy a Ford Focus.

The quantity of money is exactly the same in 1930 and 2010, ten one ounce coins.

The purchasing power of the money is the same- you can afford one automobile.

All that changed was the digits on the price tag- $300/$11,000.

Prices change in relation to the value of the money ( if the money does in fact have intrinsic value ).

You can play a game of Monopoly with three people or with six. Doubling the number of players does not render the money supply that comes with the game unusable. The quantity of monetary units held by everyone is divided in half when there are six players, but in a real economy, the prices of the hotels would drop in half because the money supply is finite. If each individual unit of money is twice as scarce in a six player Monopoly game, then the buying power of each unit is double.