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 I. Modern monetary systems and their operation

Collection:: Economics Books

THE MONETARY CRISIS 73 amortise the public debt. For the rest, the issue of currency notes was regulated and effectively reduced from 1921 onwards. But in view of English monetary habits, real inflation and deflation, i.e., an increase or decrease in purchasing media, depend even less than in other countries on the amount of currency in circulation, but rather on the expansion or contraction of credit. It was therefore decided to raise the discount rate to 79%, at the beginning of 1920. After these measures had been taken the following events happened. The wholesale price index which had risen to 325 on May 30th, 1920, thenceforward fell sharply and stood at 166 on December 31st, 1922. The retail price index, which had continued to rise until the end of 1920 and reached 265 on January 1st, 1921, in turn fell sharply from that date onwards and dropped—almost continuously—to 178 on January 1st and 163 on July 1st, 1923; but it rose again after that date. The curve of the dollar exchange is less uniform, but after having reached its maximum with a loss of 409, at the end of 1920, it also took a turn on January 1st, 1921, and registered a loss of 309, in the middle of that year, of 209%, by the end of the year, and of only 109, in 1922. Finally in February 1923 the external depreciation of the pound sterling had been reduced to less than 39, but was back to 119, in January 1924. It is not very easy to establish definitely a relation of cause and effect between the steps taken and the observed results. Deflation, properly so-called, happened after the fall in prices, or at least of wholesale prices, which it was supposed to provoke; for there was no decrease in the note issue in 1920; it was fairly small in 1921, and suddenly stopped, and did not begin again till 1922. If the figures for bank deposits are taken as forming a supplementary index of the available purchasing power, it will be seen that inflation quite definitely went on into 1920 and that deflation was even less in 1921.1 More- 1 According to M. Rist, “La déflation en pratique” (p. 31), the deflation which took place according to the indices of the period from the end of

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