III TWO MYTHS: NEUTRAL MONEY AND STABLE PRICES There are two myths in the monetary field, according to Mises: the myth of neutral money and the myth of the stable price level. His monetary theory avoided both of them. NEUTRAL MONEY In the chapter on “Indirect Exchange” — money — in Human Action, Mises begins Section 2, “Observations on Some Widespread Errors,” with this observation: “There is first of all the spurious idea of the supposed neutrality of money” (p. 398). The price effects of new money spread unevenly when it enters an economy. I have already discussed this unique … Continue reading Two Monetary Myths