Introduction to Exchange
Exchange provides the basis for all market activity. Making any progress whatsoever in a free-market require some form of exchange.
Provides a foundation for free markets. In order for markets to be free exchanges we must conduct exchanges without intervention.
The simplest type of voluntary exchange consists of direct exchanges — the exchange of one economic good for another. Although this type of exchange seems simple on the surface, it has severe limitations.
Indirect exchanges consist of those in which a person accepts an economic good in exchange for the express purpose of exchanging that good for one they prefer over the first good exchanged. Indirect exchange eliminates some of the problems inherent indirect exchange, but even with the indirect exchange of goods difficulty still arise.
An economic good that people generally accept for the purpose of indirect exchange frequently becomes what we refer to as money. Money opens the door for the most effective and efficient methods of exchange available and free markets.