price tension


for a paper currency, the value is the volume of physical assets divided by the volume money on issue.

if regulated prices are greatly different from the natural value distortions of all sorts may occur.


e.g. assets = 1,000 tonnes sugar, notes on issue = 10,000, value = 0.1t per note. If the price was regulated 

to 0.8 tonnes per note, price distortions across the system could occur (prices drastically too high or too low).













