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

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. The explanation of contemporary monetary phenomena and currency theory

Collection:: Economics Books

CURRENCY AND PRICE MOVEMENTS 119 credit. It is not till later that the earnings of consumers are affected owing to the consequent crisis or slump in trade, and then only if the decrease in the effective circulation has not been counterbalanced by the development of banking processes, whereby unemployed holdings are reduced to a minimum and the existing stock of money is made to circulate with much greater velocity. Finally, the Quantity Theory only takes into account the influence of the volume of currency in so far as that effect makes itself felt through the consumer upon goods already produced. It neglects the influence which an increase or decrease in the volume of currency in circula- tion may have upon production, and thereby on the supply of goods. But such variations are far from negligible in this respect. In order to see this, it is only necessary to observe the efforts of banks to put into circulation as much money as possible by inducing private individuals to make deposits which are used for credit operations. This process, so far from being unknown to economists, is emphasised in those passages which deal with banking, but its effect on production, and so also on the supply of goods, is generally forgotten in sections dealing with monetary theory.? Now under different headings and 1 It should also be pointed out that in expounding the Quantity Theory its application through an increase or decrease in the amount of money has been considered in a market in which, by hypothesis, the money is immediately and entirely spent in purchases and in which any increase or decrease in the amount of money therefore corresponds exactly to a proportional variation in demand. Now it is far from true that any variations in the monetary stock of a country correspond to variations in the demand for goods in the same country; currency circulates with greater or less velocity, it will lie in larger or smaller quantities in the pockets of individuals or the vaults of banks, which sometimes increase the velocity of circulation by a liberal credit policy, 1.e., by lending money deposited with them, and sometimes reduce the effective circulation and purchasing power by contracting credit. 2 Present-day economists have readily acknowledged that the intro- duction of the credit factor complicates the mechanism of trade, and several English writers (in particular Keynes, in his “Tract on Monetary Reform,” and Hawtrey in “Currency and Credit”) have analysed the question. But those economists who follow the method of deduction have commonly neglected the compensating effect of credit on supply. Moreover, however cautiously they may speak of the application of the Quantity Theory in a

Access restriction

Copyright

fullscreen: Modern monetary systems

Monograph

Chapter

Table of contents

Download

Monograph

Chapter

This page

Image fragment

Citation links

Citation recommendation