The Causes of Economic Fluctuations: Possibilities of Anticipation and Control

By Willford I. King | Go to book overview
Elasticity of Credit Supply Accentuated by Increasing Velocity of Its Circulation. -- In times when speculation is rife, trading is facilitated not only by the possibility of expanding the volume of deposit currency, but also by the possibility of increasing the velocity with which that currency circulates. Thus the annual rate of turnover in bank deposits in New York City is calculated by the Federal Reserve Bank of New York to have increased from 50.3 in October, 1924, to 132.7 in October, 1929. A year later, it had fallen to 62.4.As velocity increases, each dollar is enabled to do proportionally more money work. Thus, expanding bank credit and a rising rate of use of that credit unite to facilitate the development of booms.Summary . -- In the preceding pages, there has been set forth a fairly complete picture of the situation which prepares the ground for the booms which usher in depressions. The matter may be summed up as follows:
1. Waves of optimism occurring from time to time tend to develop booms.
2. The presence of a freely expansible credit system facilitates the growth of such booms. Existing governmental and banking arrangements make possible that expansion of credit which is necessary to enable booms to assume large proportions.
3. A boom is usually followed by a crash.
4. The fact that our wage and price structure has so little flexibility makes it almost certain that a crash will develop into a depression.

Just how these forces all work together to produce the results mentioned will be brought out more fully in the next chapter.


REFFRENCES

Descriptions of the origins of the expansibility of bank and national credit are found in:

Angell James W. The Theory of International Prices. Harvard University Press, Cambridge, 1926, Chs. III, V.

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The Causes of Economic Fluctuations: Possibilities of Anticipation and Control
Table of contents

Table of contents

  • Title Page i
  • Preface v
  • Contents vii
  • Charts xiii
  • Chapter 1 - INTRODUCTION 3
  • References 18
  • Chapter 2 - CHARACTERISTICS OF BUSINESS DEPRESSIONS 20
  • References 47
  • Chapter 3 - RECORD OF BUSINESS DEPRESSIONS IN THE UNITED STATES 49
  • References 72
  • Chapter 4 - MISLEADING EXPLANATIONS OF THE ORIGINS OF DEPRESSIONS 74
  • References 107
  • Chapter 5 - INADEQUATE EXPLANATIONS OF THE ORIGINS OF DEPRESSIONS 109
  • References 124
  • Chapter 6 - THE DEPRESSION CULTURE-MEDIUM 125
  • REFFRENCES 134
  • Chapter 7 - THE DEPRESSION'S ORIGIN 138
  • References 168
  • Chapter 8 - FORCES TENDING TO ACCENTUATE AND PROLONG DEPRESSIONSS 169
  • References 194
  • Chapter 9 - INEFFECTIVE WAYS OF COMBATING DEPRESSION 196
  • References 207
  • Chapter 10 - FORCES COMMONLY TENDING TO END DEPRESSION 209
  • References 222
  • Chapter 11 - CYCLES 223
  • References 244
  • Chapter 12 - THE POSSIBILITY OF FORECASTING BUSINESS FLUCTUATIONS 247
  • References 263
  • Chapter 13 - SOCIAL COST OF UNSTABLE PRODUCTION 266
  • References 279
  • Chapter 14 - WAYS TO MINIMIZE DEPRESSION 282
  • References 311
  • Chapter 15 - WAYS TO MINIMIZE DEPRESSION (CONTINUED) 313
  • References 337
  • Index 339
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