He has begun work on a primer. In the first entry, he writes,
Central banks are, for better or worse, responsible for seeing to it that the economies in which they operate have enough money to operate efficiently, but no more. Shortages of money wastes resources by restricting the flow of payments, making it hard or impossible for people and firms to pay their bills, while both shortages and surpluses of money hamper the correct setting of individual prices, causing some goods and services to be overpriced, and others underpriced, relative to others. Scarce resources, labor included, are squandered either way.
I am going to raise an issue with this, but keep in mind that this is an issue I have with conventional monetary theory–it has nothing personal to do with Selgin.
I do not believe that the central bank can set the money supply. Instead, think in terms of Hyman Minsky’s aphorism: anyone can create money; the trick is getting it accepted.
Consider what is accepted as money these days: among consumers and retailers, credit cards and Paypal are accepted. In the “money market” where banks and Wall Street firms trade, government securities are sufficiently liquid to act as money.
With all of these alternatives available, it is difficult for the central bank to create a shortage of money. in response, people can just make a bit more use of the alternative methods.
Creating a surplus of money is possible, if the central bank wants to turn the printing presses loose. But small increases in what the central bank supplies will more probably be met by small decreases in the use of alternative payment systems, leaving no net effect on prices.
Again, mine is not a standard view.