Commodity Theory of Money

Discipline: Economics

Commodity theory of money refers to a system of money based on a specific commodity; that is, any good suitable for exchange or consumption.

The system is usually linked to a specific quantity of the commodity whose value is determined by its price in the marketplace.

The Gold Standard was a commodity money system.

Also see: bimetallism, classical theory of money, currency principle, specie flow mechanism

Source:
M Friedman, Essays in Positive Economics (Chicago 1953), 204-50;
P Vilar, A History of Gold and Money, 1450-1920 (London, 1976)

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