Modern monetary systems

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Monograph

Identifikator:: 1753210836

URN:: urn:nbn:de:zbw-retromon-128414

Document type:: Monograph

Author:: Nogaro, Bertrand http://d-nb.info/gnd/117039713

Title:: Modern monetary systems

Place of publication:: London

Publisher:: King

Year of publication:: 1927

Scope:: XII, 236 S.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Part II. The explanation of contemporary monetary phenomena and currency theory

Collection:: Economics Books

116 MODERN MONETARY SYSTEMS larger or smaller quantities, and ultimately we arrive at the statement that “prices are proportional to the ratio between the required transactions and the amount of currency.” But in fact here are mot two separate and successive kinds of exchange ratio. Except when one cur- rency is purchased by another (foreign exchange), the medium of exchange is not in demand. Only one exchange ratio is established—i.e., between goods and money, and from this are derived the exchange ratios between goods. Thus the problem is incorrectly stated. It may, of course, be objected that, even if money is not in greater or less demand, the demand for goods is in terms of money, and, therefore, when money is plenti- ful goods are in greater demand and prices rise, as though it were money which is in less demand. But the result is no longer the same ; for on the supposition that there are purchases and sales to be made, that there is a certain volume of transactions to be effected and that there is a limited amount of currency available for the purpose, the necessary deduction is that prices will vary with the demand for currency. Those writers who are under the influence of this idea believe that the stock of money must necessarily be adequate to all transactions and must be entirely used up by them. However complicated the real mechanism of transactions may be, this principle holds good. For it is when goods are limited in quantity, when production cannot be rapidly increased to meet increasing consumption, that supply and demand come to play an essential part in the determination of exchange value. But when we come to consider, not an imaginary demand for money by parties to transactions, but the demand for goods by purchasers, we only have to refer to our general knowledge of the conditions governing exchange value to see that supply and demand do not have an equal effect and perhaps that they do not neces- sarily affect the prices of all goods. For instance, constant experience shows that the volume of demand will obvi- ously influence the price of certain goods, e.g., vegetable

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