Some key points from Friedman's essay on The Optimum Quantity of Money: It is costly for an individual to hold money. That's because keeping a dollar in your pocket requires you either to forgo some consumption or to forgo holding interest-bearing bonds. It is costless to society for an individual to hold money. That is because the dollars in your pocket are created at essentially zero cost. Whenever the private cost of an activity exceeds the social cost, we get too little of that activity. Therefore, in particular, we get too little money-holding. The way to fix this is to lower the private cost of holding money to zero. One way to do that is to lower the nominal interest rate to zero. The way to do that is to engineer a deflation equal and opposite to the real rate of interest (so that if the real rate of interest is, say, 3%, then the optimal deflation rate is 3%). (Further deflation would lead to too much money holding.) The discrepancy between private and social cost proves (and I use that word advisedly) that holding money must confer benefits on someone other than the moneyholder. The argument does not identify that someone, but it's easy to do so: When you hold a dollar, you put downward pressure on prices, which raises the value of everyone else's money. So the winners are the other moneyholders.