igo MODERN MONETARY SYSTEMS 
in the purchasing power of the currency between the 
moment when he receives it and the moment when he 
expends it, either on purchasing new supplies or on 
objects of personal consumption.! Wage-earners obtain 
rises in salary which are more or less proportionate to 
the new purchasing power of the currency; small wage- 
earners usually succeed at the beginning of a crisis in 
keeping up the full purchasing power of their earnings, 
whereas high wage-earners, and in particular the higher 
grades of officials, are sacrificed. On the other hand, per- 
sons with a fixed income, derived from fixed interest- 
bearing securities, only receive the nominal sum provided 
in their contracts without any coefficient of increase. 
House-owners are also bound by their contracts, wher- 
ever they have signed leases, and often meet with legal 
obstacles when they attempt to raise rents in new con- 
tracts in the same way in which traders alter their selling 
prices. 
As regards public expenditure, variations in the pur- 
chasing power of the currency will affect it through 
salaries of staff and the purchase of material; it is 
not affected by loans contracted before the depreciation 
set in and is comparatively little affected by subsequent 
loans, since the rate of interest does not rise in proportion 
to the decline in the purchasing power of the currency. 
On the other hand, State receipts may increase nearly in 
proportion to the depreciation of the currency owing to 
the indirect taxes and taxes on income which more or less 
follow the advance in prices. And so, in the absence of 
any uniform rule to counteract their effects, changes in 
purchasing power of money bring about serious dis- 
turbances in legal and economic relations. Moreover, 
the resulting inequalities may have the curious result of 
promoting budgetary equilibrium to a certain extent, as 
the Budget, in countries where the public debt forms a 
large part of the public expenditure, benefits by the small 
1 Hence, as we have seen, he will discount this possible depreciation and 
raise selling prices above the level already reached and so provoke again the 
very depreciation which he is trying to avoid.