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 I. Modern monetary systems and their operation

Collection:: Economics Books

74 MODERN MONETARY SYSTEMS over, a crisis occurred during this interval; it began in 1920, and among the steps taken it was not deflation proper, but the process of tightening credit by raising the Discount rate, which most nearly coincides both with the beginning of the crisis and with the fall in prices which was one of its manifestations. It is therefore hardly surprising that some observers attribute the fall in prices to the policy of deflation, whereas others attribute the crisis to it. It is strange, however, that in order to exonerate deflation its supporters have loudly affirmed that it hardly took place. Now it is difficult to maintain at the same time that deflation alone deserves the credit of having provoked the fall in prices, or, in other words, of having raised the purchasing power of the currency, and that it was not capable of contributing to the crisis. But on the whole it may be admitted that the crisis, and therefore the fall in prices which is one of its most ordinary manifestations, would have occurred some- what sooner or later even if there had been no previous intention to contract the currency ; for a period of exces- sive boom is always followed by a period of credit restric- tion. On the other hand, it should be recognised that the first effect of deflation is not a reduction in the consumers’ purchasing power, but the tightening of credit, and that, therefore, it can hardly result in a fall in prices except by provoking a crisis. A choice must therefore be made between the theory that the crisis and the fall in prices were more or less inde- pendent of the deflationist policy of the British Govern- ment, and the theory that this policy was partly responsible for both ; but it would be rash to attempt a final answer to this question without a much more detailed study of the problem than the scope of our present inquiry permits.t 1920 to the end of 1922 may be estimated at only 7%. Although it is rather arbitrary merely to add the note issue and the deposits, this estimate gives an idea of the fairly low order of magnitude of the deflation which actually took place. 1 M. Bonnet’s excellent work, “La politique anglaise d’assainissement monétaire,” Th. Paris, 1923, may be consulted on this subject, although it does not give a decisive answer to the question.

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