Section 1.2 Quiz

According to Mises, the purpose of sound money is primarily to:

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Accelerate economic growth

Enable governments to stabilize markets

Protect citizens from arbitrary state interference

Maximize consumer spending

Durability matters because money must:

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Be spent quickly to encourage consumption

Decline in value to stimulate investment

Serve as a reliable store of value through time

Require continual replacement

Fungibility means that:

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Some coins are more valuable than others

Each unit of money is interchangeable with every other

Governments should track every transaction

Savings must be taxed to prevent hoarding

Sound money lowers time preference because:

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It loses value quickly, encouraging spending

It rewards patience and long-term planning

It discourages saving

It eliminates investment

Scarcity is essential to sound money because:

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It allows governments to adjust supply when needed

It ensures money retains purchasing power over time

It encourages debt-financed growth

It allows banks to expand credit freely

Bitcoin achieves portability through:

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Government-backed wire networks

Custodial vault infrastructure

Key ownership transferable globally without intermediaries

Gold-pegged stablecoins

Which money is most predictable in issuance?

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Fiat currency, adjusted by central banks

Gold, based on mining competitiveness

Bitcoin, with a fixed halving schedule

Corporate loyalty points

Bitcoin perfects scarcity by:

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Pegging its value to gold

Fixing its supply at 21 million coins via consensus rules

Allowing miners to expand supply during high demand

Letting a committee adjust issuance targets

Recognizability ensures that money:

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Requires expert authentication

Can be created by anyone

Is easily verifiable and resistant to counterfeiting

Must be backed by institutions

Historical cases like Rome’s debasement and the 1971 Nixon shock illustrate that:

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Inflation is natural and unavoidable

Governments expand money supply when unconstrained

Gold caused economic collapse

Inflation strengthens savings