Theory of Money

Theory of Money

Theory of Money

Theory of Money

Excerpt

In this book I have tried to give a short but complete exposition of the theory of money on a narrow interpretation of that field. I have treated the analysis of aggregate demand as being outside the scope of my subject and simply used the basic model as a framework into which to fit the monetary analysis. Similarly I have not attempted to deal with institutional factors but have confined myself to an analysis only of those structural relationships which it is essential to understand in order to see how the theory operates in practice. This has been done in terms of the financial structure of the United Kingdom, whence situations and statistics have been used throughout as illustrations. This context does not, however, limit the generality of the basic theory.

My main concern has been with synthesis. Monetary theory is outstandingly rich in the variety of its approaches and this profusion of ideas is sometimes a source of confusion. My aim has been to fit together various aspects of the subject so that they form a consistent whole.

Although the book is not intended as an introduction to the subject, I have started from scratch and included much which is elementary for the sake of unity; I hope that my more sophisticated readers will bear with me over this.

For the most part the theory presented is the generally accepted Keynesian (or should we say Hicksian?) theory of money, into which I have tried to integrate the much broader concepts of liquidity which have, for some time, been lurking uneasily on the periphery of the subject. Whether or not the particular scheme of analysis which I have set out in this respect is found useful, the central position given to the new approach in the Radcliffe Report clearly calls for some such synthesis.

The first draft of this book was completed five years ago, but further work on it was more or less suspended for three years during which I was heavily engaged on other matters in the service of the Government of Uganda. Then came the Radcliffe Report followed by the four volumes of memoranda and evidence. I have revised the book in order to draw upon this unique source of information and also in order to show the relationship between my analysis and that of the report. Here again my object has been synthesis. For the . . .

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