Talk:Neutrality of money

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is neutrality and super-neutrality of money the same thing? i had both terms in a lecture but i couldn't grasp if there is any difference between the two.

• definately not the saem thing, superneutral when the rate at which the money supply changes affects the price level, neutral when the level of the money supply affects price, sorry cant explain it better.Bluemoose 08:52, 24 Feb 2005 (UTC)

[edit] Name change

I suggest changing the name of this article to Monetary neutrality. ~ UBeR 02:07, 30 October 2006 (UTC)

All the text books I've read call it the Neutrality of Money. --AtD 15:38, 30 October 2006 (UTC)

[edit] Counterfeiting

If the central bank can't affect the economy - why have it? Also why then is counterfeiting illegal? Hasn't money evolved from being a commonly traded commodity which use solves the coincidence of wants problem. Which means printing extra paper money and then using it, is taking something but not producing something in return (if the paper money isn't a claim on some commodity). How can that not distort the economy in favour of the money printer?—Preceding unsigned comment added by 135.196.109.220 (talk)

The theory of Neutrality of Money says that the central bank cannot effect the real macro-economy by changing the amount of money in circulation, as money is just paper and coin, not factories and such. It does not make any claims on other methods central banks use to control the economy. Summed up, it basically means printing money doesn't make factories and highways appear out of nowhere. Any changes in aggregate demand caused by a change in the money supply are "neutralised" by changes in the price level. The theory implies there are no long run problems caused by inflation, thus only holds true in a closed economy.

With regards to Counterfeiting, it's illegal because it unjustly transfers wealth to the Counterfeiter. Under the NoM theory, it doesn't change the size of the macro-economy in the long run, but could change the price level. --AtD 14:10, 21 February 2007 (UTC)

Well, the same happens when the Central Bank prints money - the money is not distributed equally to all people! It only gradually spreads throughout the economy. The effect is that the first receiving the money benefit twice: 1 when they use the money to buy the factors of production at old prices; 2 when they sell their products at new, post-inflation, prices. The idea of money neutrality is pure non-sense. The Central Bank is a legalized conterfeiter!