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 III. Monetary theory and its application in practice

Collection:: Economics Books

200 MODERN MONETARY SYSTEMS gold value of the rupee was raised to one-tenth of a sovereign. The rupee therefore came to represent a larger number of monetary units in Great Britain and also in the United States, Japan, etc. This change in what may be called theoretically the gold tenor of the rupee may have had someeffect on internal pricesin India, becauseit enabled imported goods to be purchased more cheaply in rupees and thus enabled exported goods to be sold less dearly in rupees. But the relation of cause and effect between the change in the theoretical gold tenor of the rupee, of which the silver rupee is more or less the representation (as would be Mr. Fisher’s gold dollar, since it 1s partly fiduciary in character), is indicated by a variation in the rate of exchange due to the change in parity —or in the gold tenor—and to the increase in the number of foreign monetary units which could thenceforward be obtained by the rupee. Hence it is impossible to argue from this observation that changes in the theoretical gold tenor of a monetary unit are such as to affect prices if these changes have not modified the rate of exchange and enabled the internal monetary unit to represent a larger number of foreign monetary units. This assumption is eliminated in the international plan for a “compensated” currency drawn up by Mr. Irving Fisher. Thus in order to make this plan plausible, we should have to adopt an interpretation different from that of the author—the one given by M. Gide—namely, that when the gold content of the dollar is increased, the number of dollars is diminished, so that the value of each one is increased—and wice versa. But here we can only repeat the reservations which we made in connection with that application of the Quantity Theory which states that any variation, however large or small, in the volume of currency, reacts at once and definitely on prices. This statement, put in the form of an arbitrary generalisation, misinterprets the meaning of observations made in a closed market in which an increase in the volume of currency strictly means an increase in demand and in which supply cannot increase in proportion to demand. Moreover, it fails to take into account the extreme complexity of monetary

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