The optimality of inflation in ‘pure currency’ economies: a conjecture

The term pure currency means an economy of people whose histories are private and who, therefore, cannot be punished individually in the future for current actions. In many economies of that kind, any trade requires the use of outside money and taxation is not feasible. The conjecture is for economies of that kind in which there are extensive margins that play a role. For such economies, the conjecture is that there are transfer schemes financed entirely by money creation that improve ex ante representative-agent welfare relative to the best that can be achieved holding the stock of money fixed.