money currency

last time, i said, the cost of making currency, cannot be higher than the value. since it will cost wasting.

so, the cost of making currency has a upper bound, the value of its own. e.g. the cost for making 100US, cannot larger than 100US.

on the other side, if the cost is lower the value, people will try to make, because it create profit.

thus, the cost has a lower bound, its value.

so, 100US is made from 100US.

ok, so, far, it is correct, for treating the currency as if it is a goods, like the old time, gold.

how ever, the technique for making money is hard to duplicate, the coat can be lower than the value. since the security cost recover the "real" cost, or security barrier.

if the market allow people make currency, the cost will be push as low as possible (if no other constraints, its value will go to as low as possible, named inflation), as far as people trust it, which can offer the service or goods as it valued. later on, currency is just a symbol, to represent the buying power. which is more or less like today, we use paper money or E-money. we don't really need gold to support our currency. however, this only under the constrain that, the currency is good quality enough and at the Zero cost with somewhat barrier (security, authorization). the good quality ensure the "money" can be kept for long. the Zero cost, make it easy to create or destroy. the barrier, make people don't think about to make free money. otherwise, if "money" are so much, the inflation will come. that's why, there are some rules for monetary policy.

in this case, we can see, only free market, is not really enough. some thing like government needed to control the market, set up some rule, so everybody should obey. but the government will not stay long after the rules become a common knowledge to people. people know what will be happen if they don't follow the rule. at that time, a free market re-opened.

how-a-day, government try to put some of their departments back to the market. is it under the same development process??