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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Chapter

Document type:: Monograph

Structure type:: Chapter

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

Collection:: Economics Books

144 MODERN MONETARY SYSTEMS behind the immediate cause, viz., the disappearance of the export gold point, an ultimate cause in the fiduciary cir- culation. Now the arguments for stating that the volume of the circulation may give rise to an exchange crisis may be valid when we are looking for factors which affect the rate in the case of an exchange already dislocated, i.e., which may aggravate or mitigate an existing loss on ex- change. Apart from the explanation which merely con- sists in confusing external with internal depreciation, the most crude notion on which the belief in a constant rela- tion between exchange and currency variations can be based is the following. Paper currency only has value in so far as it is secured on the metal currency, which is in the nature of a commodity ; and the rate of exchange depends upon the ratio between this security and the note issue. But it has been observed that by a curious rebound a paper currency often falls faster than it expands, and that therefore it is more heavily secured the more it loses its value. If the mark circulation is raised from 40—400 milliards while the metal holding remains constant at one milliard of gold marks, this holding at a rate corresponding to 25 gold pfennigs may be adequate cover for 4 milliards of paper marks or one-tenth of the total issue ; the proportion of cover remains the same with a circulation of 400 milliards if the exchange does not fall below a rate corresponding to 25 gold pfennigs, but it rises if the exchange falls lower. Indeed, it is by no means impossible that the amount of the security—a theoretical security so long as the notes are inconvertible—may have some influence on the minds of certain more or less inexperienced speculators. But if the metallic cover be considered as a commodity and more simply as a currency which has some value abroad, it be- comes difficult to see how the agio can depend for any considerable length of time upon the ratio between the amount of fiduciary currency and the amount of a metal currency which cannot be put to any use.! Therefore modern economists who are anxious to recon- 1 Hence it is useless to expect a progressive contraction of the fiduciary circulation to provoke a corresponding improvement in the exchange.

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