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

126 MODERN MONETARY SYSTEMS Economists thus become concerned with exchange phenomena when they find themselves faced by a depre- ciated national monetary unit. It only needs one step further—and a short step—to say that an exchange crisis is due to a depreciation of the currency and to ascribe the latter to excessive quantity ; and this explanation is all the more natural because exchange crises do, in fact, often follow exceptional measures such as abnormal issues of paper money, etc. We hasten to add that this explanation, however hasty and superficial, should not, in our view, be entirely discarded. But even if a theory which tends to connect closely fluctuations in the exchange with varia- tions in the circulation may ix the event be reinforced by a detailed analysis of the facts, it nevertheless originates in an inadequate knowledge of realities and in misconceptions which it is necessary to discard from the beginning. We have already pointed out the error contained in the common statement that a rise in prices “results” from a depreciation of the currency. Prices express an exchange ratio between currency and goods. Therefore when the value of money falls in relation to goods, or, in other words, when prices rise, the value of goods increases in relation to money. A rise in the price level and monetary deprecia- tion are synonymous terms ; and care should be taken not to confuse a tautological expression for a statement of the relation of cause and effect which should be sought, not as between a rise in prices and depreciation, but as between a rise in prices or depreciation and factors, such as, i.e, an excess of currency which may have produced it. The same remarks also apply to the following case. If an exchange crisis is said to be due to the depreciation of the national monetary unit and if by depreciation is meant the decline in the exchange value of the national monetary unit in relation to some foreign curtency, as measured by the loss on exchange, then the same error 1s made as has been noted above. It is true that a national monetary unit which has depreciated in relation to foreign currencies may also have depreciated internally in relation to goods and usually

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