Glossary
The terms the theory leans on. Some are coined here; others are borrowed and given a specific job.
- Scarcinality
- The ordering of scarcities. The principle that the scarcities binding an economy are ranked rather than flat, and that in a credit economy a shortage of money holds causal priority over a shortage of goods, propagating downward to counterfeit a shortage of goods amid physical plenty.
- The master scarcity
- Money. It holds the top of the ranking because every transaction passes through it, so its shortage is general where any single good's shortage is only particular.
- The descent
- The movement by which a shortage of money travels downward into the real economy, cutting output and employment, and so disguises itself as a shortage of goods and work.
- The counterfeit
- A real-looking shortage of goods that is in fact a shortage of money one level up. Goods sit unsold and unbought not because they are scarce but because the money that would move them has frozen.
- The dash for cash
- The moment in a crisis when everyone reaches to hold money at once to meet debts denominated in it. The reaching is what makes money scarce. The clearest demonstration that money, not goods, is the binding constraint.
- The scarcinality manager
- The lender of last resort, usually a central bank. Its crisis function is to flood the monetary layer with liquidity so that a shortage of money cannot descend and counterfeit a shortage of goods. Its power rests entirely on credibility.
- The phase plane
- A diagram plotting inflation against unemployment, divided into four quadrants. It is read not as a menu of choices but as a map of where the binding scarcity sits and which way it is moving.
- Debt-deflation
- The lower-right quadrant. A descent in a sound-money regime: the scramble for cash drives prices and employment down together, while falling prices raise the real weight of debt. Fisher's spiral. The shape of the 1930s.
- Stagflation
- The upper-right quadrant. The same descent in a debased or supply-shocked regime, so that prices rise even as unemployment does. The worst case for the manager, because the two scarcities call for opposite remedies.
- The two flights
- The two opposite roles an asset like cryptocurrency can play, decided by what people are fleeing. In a dash for cash they flee toward the dollar and sell crypto; in a flight from a debased currency they flee away from the dollar and may buy it. Same asset, opposite direction.
- Credit-coupled goods
- Goods normally bought on borrowed money, such as housing and automobiles. Their demand is a demand for credit, so they soften first when a descent begins. The framework's leading indicators, the canaries.
- Velocity
- The rate at which money turns over. The dial on which the master scarcity registers. It is a symptom rather than a cause: money slows because everyone is holding it, and they hold it because it has reached the top of the order.