10 
Inflation and Stabilization 
the value of the currency could only be taken into 
consideration in cases where the old gold parity 
was within close reach. The warning against the 
dangers of deflation was met by the recommenda- 
tion, which for some years enjoyed great popular- 
ity, that deflation ought to be carried through very 
slowly and over a great number of years. In this 
way the evil effects would become inappreciable. 
The fallacy of this view was demonstrated in the 
most drastic way by the experiences that followed. 
A gradual and long continued increase in the pur- 
chasing power of a currency, if possible, would have 
the most harmful effect. We know, however, that 
it is practically impossible, once such a program 
has been officially proclaimed, to carry it through 
at the slow pace intended. Speculation will always 
anticipate a coming increase in the value of the 
currency and therefore precipitate the -develop- 
ment in such a way that the authorities will lose 
all control of the situation. Such forces will be 
most powerful in the international field, and the 
phenomenon can therefore best be studied in con- 
nection with the analysis of the international valu- 
ation of currencies. 
The International Economic Conference held in 
Genoa in 1922 adopted on the recommendation of 
its expert committee a resolution in favor of im-