# Indirect Exchange Summary::A trade that does not secure the commodity desired in a single exchange, hut proceeds by one or more intermediate steps. [[Money Exchange]] --- >Lexicon >A two step exchange in which the first step is to exchange one's goods or services for a medium of exchange (q.v.), usually money (q.v.), and the second step is to exchange the medium of exchange so obtained for the goods or services desired. Indirect exchange contrasts with direct exchange (q.v.), i.e., barter or trucking, in which one trades his goods or services directly for the desired goods or services of another without the intermediary use of a medium of exchange, usually money. The need for indirect exchange increases as the division of labor increases and more goods and services become available for exchange. > >[[Human Action - Mises (HA)]] 202-04,398-478; [[Theory of Money and Credit (M.)]] 29-34. --- # References A practice note on prices and exchange. [[indirect exchange]] ![[indirect_exchange.jpg]] [Indirect Exchange](onenote:https://d.docs.live.net/ec00bb0ca51cd95d/OneNote%20Notebooks/Content%20Creation/Economic%20Fundamentals%20Introduction.one#Indirect%20Exchange&section-id={F7C60EE1-20D3-406E-89FA-942669C201EE}&page-id={051AE4A7-B833-8E42-88F3-FF9CD4E3292F}&object-id={709C6AF4-DD69-CF4B-9058-09EC2D5E673F}&10)  ([Web view](https://onedrive.live.com/view.aspx?resid=EC00BB0CA51CD95D%2143501&id=documents&wd=target%28Economic%20Fundamentals%20Introduction.one%7CF7C60EE1-20D3-406E-89FA-942669C201EE%2FIndirect%20Exchange%7C051AE4A7-B833-8E42-88F3-FF9CD4E3292F%2F%29)) OneNote:[Indirect Exchange Diagram](onenote:https://d.docs.live.net/ec00bb0ca51cd95d/OneNote%20Notebooks/Content%20Creation/Economic%20Fundamentals%20Introduction.one#Indirect%20Exchange%20Diagram&section-id={F7C60EE1-20D3-406E-89FA-942669C201EE}&page-id={61E00822-6912-2844-9CD2-7A6DDCC9C8CA}&end)  ([Web view](https://onedrive.live.com/view.aspx?resid=EC00BB0CA51CD95D%2143501&id=documents&wd=target%28Economic%20Fundamentals%20Introduction.one%7CF7C60EE1-20D3-406E-89FA-942669C201EE%2FIndirect%20Exchange%20Diagram%7C61E00822-6912-2844-9CD2-7A6DDCC9C8CA%2F%29)) # Indirect Exchange The concept of indirect exchange provides the basis for understanding the true complexity of market economies. An indirect exchange exchange occurs when either party accepts a good in exchange with the intent of exchanging it later for another good. ## Goods Direct exchanges frequently occur with consumable goods. I shoemaker might accept a pound of coffee in exchange for a pair of his shoes with the intent of later exchanging the coffee for a chicken. ## Money I will devote a considerable amount of space to describing money and its role in a market economy. Above all, to fully understand money and its role, one must understand that people use money solely for indirect exchange. They have no intention of consuming it; they simply want it to exchange for other goods. ## Money Prices Money prices consist of the ratio of the amount of money exchanged for a specific quantity of other goods. I want to make it clear from the outset that money prices **_do not represent measures of value_**. Only the individuals making trades will know the value. [[Indirect Exchange – Generation]] [[Indirect Exchange - Fundamental]]