Studies in the Classical Theories of Money

Studies in the Classical Theories of Money

Studies in the Classical Theories of Money

Studies in the Classical Theories of Money

Excerpt

These studies were written before the present emergency, as parts of an inquiry into basic concepts of monetary theory. A definite need was felt for an investigation into the formation of doctrines, in order to return monetary analysis from its present function as a guide book to economic post mortems, to a tool in the formulation of policy.

In 1940 and 1941 the author acted as an advisor on monetary and fiscal policies to the Consumer Commissioner of the National Defense Commission. It was at that time that traditionalist economists and a vociferous part of the public began to raise the cry about the threat of a runaway inflation, and with -- post hoc, propter hoc-- songs about the "inflationary gap," with their contrapuntal intricacies, tried to persuade the general public to look backwards and get scared rather than look forward and deal adequately with a newly developing economic reality.

Because of these theoretical preconceptions representing straight-line projections of misconceived past experiences into the present and the future, it was realized once more that only a historical and material analysis of monetary theoretical thinking could help to dispel the veil that "received doctrine" was spreading over current events. On the basis of such an analysis -- the major historical part of which is presented here in the following studies -- the author argued and still argues that the concept of inflation has a historical content subject to qualitative change, the understanding of which invalidates for the conditions of the present most, if not all, the judgments traditionally implied in it.

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