136 MODERN MONETARY SYSTEMS 
enable them to purchase in France the same amount of 
goods as those dollars would purchase in America. We 
shall consider at a later stage whether it is possible to hold 
that an exchange market works in this way. But in any 
case it may be admitted that if the actual exchange rate 
does not correspond to the “purchasing power parity,” 
exports will continue to decline until the exchange is ad- 
justed to prices, and this decline would normally contri- 
bute to the fall in the exchange. Other writers merely see 
in an abnormal issue of a fiduciary currency an artificial 
increase in purchasing power which stimulates purchases 
including the purchase of imported goods or sends up the 
prices paid for them ; a process which at all events ends 
by unsettling the international exchanges and therefore 
gives rise to a flight of precious metal or brings about a 
prohibition to export it and so the disappearance of the 
export gold or silver point. 
Others think that an excessive issue of fiduciary cur- 
rency creates increasing difficulty in obtaining coin which 
decreases in proportion to paper and may be entirely 
driven underground ; so that here again we find an ab- 
normal agio in favour of coin and the disappearance of the 
export gold or silver point. 
Finally, those who consider that money is essentially a 
form of goods and that fiduciary money only has value in 
so far as it is “secured” by metal believe that inflation 
means diminishing the security in proportion to the notes 
in circulation and that this decrease ends by reducing the 
“intrinsic value” of the fiduciary monetary unit which has 
been issued and by considerably damaging the value 
assigned to the currency on the exchange market. 
It is true that history furnishes examples of circum- 
stances in which the internal depreciation of a currency, 
chiefly due to an abnormal expansion of the circulation, 
appears to be the dominating factor and the external 
depreciation or loss on exchange as a mere corollary; 
the most important is the depreciation of assignats in 
France at the time of the Revolution. Even during this 
period it would not perhaps be entirely correct to attribute