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Money as Information: Economical and Philosophical Implications for the Quantity Theory of Money

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  • André Rehbein-Sathler

Abstract

This paper develops a novel theoretical framework that reconceptualizes money as information, extending the classical Quantity Theory of Money through information theory. By substituting Shannon’s entropy equation for the traditional quantity of money variable in Fisher’s equation of exchange, we establish a new analytical framework for understanding monetary phenomena. Our approach yields three primary contributions. First, we demonstrate how monetary systems can be analyzed through their informational properties, with particular attention to limit cases where informational entropy approaches zero (analogous to gold standard systems) or infinity (corresponding to hyperinflationary scenarios). Second, we explore how this informational perspective provides new insights into monetary stability and policy effectiveness, especially relevant for digital currencies and modern financial systems. Third, we examine the philosophical implications of viewing money as information, engaging with questions of ontology, phenomenology, and ethics in monetary systems. The framework proves particularly valuable for analyzing contemporary monetary phenomena, including cryptocurrency systems and digital central bank currencies. Our findings suggest that monetary stability depends not merely on quantitative factors but on the quality and reliability of information transmission within the economic system, offering new perspectives for monetary policy and financial system design.

Suggested Citation

  • André Rehbein-Sathler, 2025. "Money as Information: Economical and Philosophical Implications for the Quantity Theory of Money," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 17(2), pages 1-99, February.
  • Handle: RePEc:ibn:ijefaa:v:17:y:2025:i:2:p:99
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    References listed on IDEAS

    as
    1. Romain Plassard, 2017. "Disequilibrium as the origin, originality, and challenges of Clower's microfoundations of monetary theory," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 24(6), pages 1388-1415, November.
    2. Hansen, Stephen & McMahon, Michael & Tong, Matthew, 2019. "The long-run information effect of central bank communication," Journal of Monetary Economics, Elsevier, vol. 108(C), pages 185-202.
    3. Plassard, Romain, 2017. "Disequilibrium as the origin, originality, and challenges of Clower's microfoundations of monetary theory," MPRA Paper 78917, University Library of Munich, Germany.
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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