Modern monetary systems

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Monograph

Identifikator:: 1752429486

URN:: urn:nbn:de:zbw-retromon-127700

Document type:: Monograph

Author:: Franklin, Benjamin http://d-nb.info/gnd/118534912

Title:: Essays of Benjamin Franklin

Place of publication:: New York

Publisher:: G. P. Putnam's Sons

Year of publication:: 1927

Scope:: xi, 273 Seiten

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

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Title:: II. The interest of Great Britain considered, with regard to her colonies and the acquisitions of Canada and Guadaloupe

Collection:: Economics Books

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

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