Why Is the Dollar Shrinking?; A Study in the High Cost of Living (Paperback)

Book may have numerous typos, missing text, images, or index. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. 1915. Excerpt: ... be sufficient to raise its rate of increase above per cent per year. But it would not be surprising if the truth should be several times this figure, particularly as the extension of rapid transportation will also tend powerfully in this direction, especially in slow and backward countries like India. We see, then, that in the future monetary inflation is likely to be at work, both through an actual increase in the quantity of money and also through its virtual increase, which will be brought about by the release of the great hoards of money in the East. Since the discontinuance of hoarding means the same thing as an increase in the velocity of circulation of money, our conclusion may be stated as follows. Monetary inflation may be expected, both from an increase in money and from an increase in its velocity of circulation; that is, to go back to the equation of exchange, an increase in both M and V. 2. As to Credit and Volume of Trade We have just mentioned the effect which the discontinuance of hoarding money will have on the volume of deposits subject to check. Let us now consider in a more general way the importance of the growth of these deposits all over the world. When once it is generally recognized that deposits subject to check are a form of currency similar in function to bank notes, -- in fact, are today the chief form -- the discussion of the price level will assume a new phase. In the United States the volume of check transactions forms 92 per cent of all transactions. Probably something like this ratio obtains in Canada and England. Outside of English-speaking lands, however, the ratio is undoubtedly much less. If we could assume that the volume of check transactions maintains a constant ratio to that of money transactions, the circulation of checks would not ...