Geldwertes

Geldwertes is a term used in German economics to denote the monetary value of money, i.e., the purchasing power of a currency at a given time. In English-language economics, the concept is usually described as the real value of money or its purchasing power. Geldwertes is often discussed in relation to the nominal face value of money versus what that money can actually buy.

Its level is determined by the interaction of money supply and demand, inflation (the general rise in prices), expectations about future prices, exchange rates, and interest rates set by a central bank. When inflation rises, the Geldwertes tends to fall because each unit buys fewer goods and services.

Economists measure Geldwertes using price indices such as the consumer price index (CPI) or the GDP deflator to derive real money values. Comparing Geldwerte over time requires adjusting nominal amounts for inflation, yielding real values. Across countries, purchasing power can be compared with purchasing power parities or price level indices.

Historical episodes show the importance of preserving Geldwertes. The Weimar Republic experienced a dramatic collapse of monetary value during 1923 hyperinflation, while many modern economies pursue price stability through targeted inflation rates to maintain the Geldwertes of their currencies.

See also: money, inflation, monetary policy, purchasing power, real vs nominal value, price index.