Money

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Monograph

Identifikator:: 1819853969

URN:: urn:nbn:de:zbw-retromon-207464

Document type:: Monograph

Author:: Cannan, Edwin http://d-nb.info/gnd/118666916

Title:: Money

Edition:: 6. ed.

Place of publication:: [London]

Publisher:: King

Year of publication:: 1929

Scope:: XII, 120 Seiten

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. Further elucidations

Collection:: Economics Books

70 MONEY only get half as much, but there is nothing to prevent him issuing twice as much in the second month, four times as much in the third, eight times in the fourth, and so on, and then he will be able to go on acquiring the same amount of commodities per month in- definitely. Experience seems to show that the unit of a currency falls to zero in value long before the supply of the currency reaches infinity, and believers in the doctrine have been unable to explain why. They have contented themselves with eluding the point by means of propositions such as, “however many units of currency may be issued, so long as they really circulate, they will always have some value, however small.” No doubt; but is it not equally true that so long as they have some value they will continue to circulate ? They will stop sirculating when they lose all value. The explanation seems to lie in the fact that human intelligence anticipates what is coming. When it is seen that the value of currency is steadily falling, people see that it is more profitable to hold goods than currency, the demand for currency fails to extend in proportion to the enlargement of the supply, and its value consequently falls more rapidly. The issuer very likely redoubles his efforts to keep up with the fall by issuing new currency at a still more rapidly increasing rate, but all to no purpose—he is bound to lose the race, and the reason is that the elasticity of demand is less than unity. In the converse case, that of reduction in the supply of currency, there is also reason to expect an elasticity less than unity. As general prices fall owing to the reduction, people will endeavour to protect themselves by displaying greater readiness to part with goods and services, and less to part with currency, and anticipation will thus cause the fall of general prices to outrun the diminution of currency. - Pushed to

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