Modern monetary systems

Bibliographic data

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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Vv: INTRODUCTION phenomenon ? The depreciation of some other money, some currency of a low standard, of debased metal—in fact, a low-grade commodity—or even WOrSE, a paper cur- rency. And surely in this last case there need usually be no hesitation in advancing an obvious a priori reason for the depreciation, namely, excessive production. Turning to the phenomena of rising prices, we observe that, in a country where there is only one currency left— a paper currency which the Government increases indefin- itely—a rise in prices will occur. Or again, a rise will take place in one or more countries where the standard is still gold—that sound and solid metal. It is true that the rise is much smaller, but in spite of an immense difference in degree, the phenomenon must be essentially the same in both cases. If prices rise, that is to say, if more gold must on the average be given for the same object, gold itself may be said to have depreciated. Surely this is due to there being too much of it. The Quantity Theory covers all these phenomena of general price movements. Take, lastly, the phenomena of the exchanges. The rate warns us that a given national currency is falling more or less below the normal rate of exchange, below par,! if we are dealing with currencies of the same metal. This, it is said, 1s due to the depreciation of the particular currency. And why should it have depreciated for any other reason save that it does not fulfil the essential condition of sound money—that it shall be a commodity—or else because it is produced in excess ? Here again the notion of a com- modity and the Quantity Theory seems to solve the prob- lem for us. Turning now from theory to practice, let us consider the problem of restoring the value of a depreciated currency and of strengthening a weak exchange. The solution is to be found in a very simple piece of reasoning. A currency need only be reduced in volume in order to recover both its internal and external value, or, as the modern phrase goes, it is only necessary to deflate. Finally, take the case of an attempt to make a stable On the exact meaning of the idea of “par,” see infra, p. 4. 73

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