Now consider an agricultural economy with limited currency of other sorts such that eggs pick up at least some of the slack. The consumer of the eggs presumably sees some gain from trade in the final transaction; that person values the eggs at least as highly as what is being exchanged for them. The penultimate owner presumably values what is being received from the final owner more highly. Now consider the trade between the antepenultimate owner and the penultimate owner of the eggs. We suppose
- the transaction couldn't have happened had the eggs not been available as a medium of exchange
- there was a substantial gain from trade in the eyes of both parties
- if it is common knowledge that the eggs are deteriorating, the terms of trade should reflect this.
Now let's go back to money that is expected to last, in some practical sense, forever. The social value of a dollar is the value of the transactions it can facilitate; a dollar that is return-dominated is, in some neutral unit of account, depreciating, but as long as the present discounted value of the gains from trade of the trades it will mediate is at least (say) a few dollars, the dollar can kind of steal that. The more slowly the dollar deteriorates, the more marginal trades it can intermediate; a dollar that depreciates quickly will only be accepted as payment if the gains from trade are large.