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

148 MODERN MONETARY SYSTEMS § 7. The search for a limit to the fluctuations of abnormal ex- changes; discussion of the theory of Purchasing Power Pariry. There are, however, certain authors who have attempted to discover the norm which determines the rates of ex- change once they have moved outside the gold points, and who, believing that they have discovered that norm, have thought that they have also discovered a force tending towards equilibrium which will automatically restore unstable exchanges and ultimately enable them to be stabilised. According to this theory, the movement of the exchange once it has passed outside the gold points is governed by the ratio between the respective purchasing powers of the currencies which are to be exchanged ; the ratio should be such that each of these currencies, after being converted into foreign currencies, retains substantially the same pur- chasing power as it had at home. This view, which has been set forth in various publications by the Swedish economist Cassel, should certainly not be rejected without a further examination. The argument is easily summar- ised. If, for instance, prices have doubled in England, thus showing that sterling has lost half its purchasing power, and if they have increased fourfold in France, thus show- ing that the purchasing power of the franc is only one- quarter of what it was before the war, the exchange be- tween sterling and francs ought to stand at about 50 francs as compared with 25 francs in normal times. For in the opinion of this author a Frenchman who pays 50 francs for one pound sterling but who obtains with each pound double the quantity of goods which he could obtain in France for 25 francs can go on buying in England without disadvantage. Conversely, an Englishman who obtains for 25 francs in France half the quantity of goods which he would obtain in England for one pound sterling can nevertheless go on buying in France because he will henceforward obtain so instead of 2§ francs for each

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