Simplified Wealth of Nations by Adam Smith, Book 4, Chap 1b: Effectual demand and the demand motive

Effectual Demand and the demand motive

12 The amount of commodities human industry can buy or produce is naturally regulated by the effective demand in every country.

13 When the quantity of gold and silver imported into any country exceeds the effective demand, no government vigilance can prevent their exportation.

14 It is partly due to the easy transportation of gold and silver that their price does not fluctuate like the price of other commodities. 15 If gold and silver should fall short in a country which can buy them, there would be more expedients for supplying them than almost any other commodity.

The Scarcity of Money

16 The scarcity of money is the most common complaint.

17 It would be too ridiculous to prove that wealth only consists in goods and not in money.

Selling Vs. Buying

18 Merchants can buy goods more easily with money than buy money with goods, not because money is wealth.

A merchant might be ruined by not being able to sell his goods in time

It is not for its own sake that men desire money, but for the sake of what they can purchase with it.


Next: Chapter 1c: Metal money supply