Monopolistic provision is thus a necessary condition for fiat money to command a positive value in equilibrium, and thereby potentially serve as the foundation for macroeconomic stability. But monopolistic provision is not sufficient, for a profit-maximizing monopoly supplier of fiat currency would also find it profitable to expand the nominal stock of such money at a rate far in excess of that required to preserve its purchasing power. For this reason, the scarcity of fiat money must be contrived, not merely by monopolizing its production, but by having the monopoly producer supply a less-than profit-maximizing quantity.
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