In a pure-currency economy, money is the only durable object and people have private histories. In such economies, taxation is not feasible and in some of them trade is enhanced through the use of money. For economies of that kind in which a nondegenerate distribution of money, part of the state of the economy, affects trades and real outcomes, and in which trades affect the state at the next date, the conjecture is that there are transfer schemes financed by money creation that improve ex ante representative-agent welfare relative to what can be achieved holding the stock of money fixed.

In this paper we consider a particular international economic policy regime: the laissez-faire regime, the distinguishing features of which are unrestricted portfolio choice and floating exchange rates. And as we show, this regime, although favored by many economists, is not economically feasible. It does not have a determinate equilibrium. That is an implication of an overlapping-generations model. More basically, it is an implication of the notion that money is wanted only in order to accomplish trades.