Touch

Money is a fascinating research topic because it is full of mysteries and contradictions.For paper, print

A patterned piece of green paper has little to do with a similarly sized piece of paper torn from a newspaper or magazine.

There is no difference, but the former piece of paper can make its holder get a certain amount of food, drink, clothes and other necessities of life.

necessities, and the other piece of paper can only be used to start a fire.Where is the difference?It is that this green paper is printed on it: "beautiful

The United States of America will immediately pay its holders... dollars", or other words to that effect, in addition

This is a "legal tender" statement.However, in the present case, this commitment means only a piece of green paper

A piece of green paper is interchangeable with one or several other pieces of green paper, or with coins such as

If they were melted down and sold as metal in the market, they would earn less than the amount of paper money they could exchange for.legal order

The status of currency means only that the government accepts these papers in satisfaction of its claims, and that the courts will

Think of it as a liquidation of debt denominated in dollars.Why are these papers used in private transactions of goods and services?

Can it be accepted privately as well?

A simple and correct answer is that everyone accepts these papers because he is convinced that others will accept them

Paper.These green papers have value because everyone thinks they have value; and everyone thinks it

They have value because they have had value before in people's experience.If there is no common,

If the medium of exchange is generally accepted, our economy may not even be a fraction of the current level of productivity.

part; however, this common and generally accepted medium of exchange is essentially a social convention, which

Social conventions owe their existence entirely to the widespread acceptance of a so-called fiction.

This social convention, or fiction, or whatever you want to call it, is not vulnerable.Instead, a public

The social value of money is so great that, even under extreme incentives, people will hold on to it——

Of course, this is where money issuers get part of their gains from inflation, and thus the motivation for inflation is partly

Points come from here.But this stuff is not indestructible either: extreme fluctuations in the amount of this green paper, just as beauty

what happened during the American Revolutionary War or the period of hyperinflation that countries experienced after World War I and World War II, or

or this mild change in the quantity of green paper coupled with legal and practical maximum limits on nominal prices,

Germany after World War II would render the paper that had previously functioned as currency worthless and prompt people to seek

Substitutes, such as cigarettes and cognac, served as mediums of exchange in Germany after World War II.

Money is but a veil. The power that "actually works" is the ability of men, their industry and ingenuity, their

The resources at their disposal, the economic and political organization of the people, and so on.As JohnStuartMill in

As stated more than a century ago:

"In short, there is nothing in the economy of society that is less intrinsically insignificant than money; when

Except, of course, the properties of money as a time- and labor-saving invention.it is a thing that can make

Mechanisms to proceed faster and more conveniently, whereas when there is no currency, things will proceed more slowly and inconveniently, while

And, like many other mechanics, when it goes awry, it has unique and independent effects on itself. "

This statement is absolutely correct.Yet there is something misleading, unless we recognize that there is little

There is a human-owned invention that, when it goes wrong, can do more harm to society than money.

Each person thinks that he can determine the share of money in his wealth; however, the total amount of money that everyone can hold

amount, but not all currency holders can control it.Each bank thinks it can decide how much of its assets

Shares are held in the form of cash and Federal Reserve Bank deposits to meet statutory reserve requirements and contingency needs;

However, the total amount of money that all banks can hold is not controlled by all banks.If a certain bank

If the bank's cash quantity increases, it can thereby acquire other non-cash assets up to equal to this increase; then

However, if the amount of cash in all banks increases together, the banking system can thereby gain an amount equivalent to this increase if

dry times other assets.

This deceitfulness of appearances was repeated in the course of our analysis.During the Civil War, denoted in the Green Bill

The price of gold fluctuates from day to day according to the changing situation of the war; but the situation of the war is only to a small extent

affect these fluctuations—unless the situation of war affects the foreign holdings of green notes or securities denominated in green notes

will.This effect was more reflected in the massive reduction in cotton exports and the financing of wars through the issuance of currency

The rise of internal prices in the North during the golden hour.

A measure taken to facilitate the restoration of mint payments by increasing the value of the dollar expressed in foreign currencies, in conjunction with

Decrease in the value of the dollar expressed in foreign currencies by Franklin D. Roosevelt for the exact opposite purpose

The measures are completely consistent.In both cases, the Treasury purchased gold from abroad.new deal economics at least

True in this respect, so in the period of green notes, taking this same measure meant that the purchase of gold from abroad

Mechanical influences made the restoration of minted payments more difficult, not easier.

Although the reinstatement of mint payments was a major political issue for 45 years, the cost of mint payments

recovery, but little has been attributed to those measures taken in its name.The main contribution of the government is to reduce the high-energy

The amount of money - it must be admitted that, given the pressure to expand the issuance of green notes, it has achieved nothing in purely political terms.

The recovery of minted payments was successful because despite a modest rise in the money stock, the rapid growth in output kept prices

grid level dropped by half.The government measures that had the greatest impact on the recovery of minted payments were not those explicitly

monetary policy, but those failures and mandates that facilitated the rapid growth of output.

The "sound money theory" attacks the advocates of free coinage on the grounds that free coinage would

Leading to an excessively rapid expansion of the money stock, causing price inflation.The reason people blame the Treasury for silver

policy of restrictive purchases because they believed that these purchases increased the stock of money excessively and thus became a stimulus for the

The harbinger of inflation, and the unlimited purchase policy can release inflationary pressure.In fact, assuming the gold standard

was not abolished, the main economic harm from this silver riot was only that it increased the stock of money.

The growth rate is too low, which leads to deflation.It has this effect because people's belief that the United States will give up the gold capital

The panic of the system reduces the inflow of capital, otherwise the inflow of capital will be more; in other words, this panic caused the inflow of capital

flee.Correspondingly, these circumstances require that the domestic price of gold in the United States be lower than that established on the basis of official gold prices in the United States and foreign countries.

The level necessary to balance the balance of payments at a given exchange rate.

The defeat of Bryan in 1896 marked the culmination of this silver commotion.The reason why it became the climax is not

It is because Bryan's eloquence has lost its force, and it is not because "sound money" advocates have persuaded

He was not an advocate of the free minting of silver coins, but because of the discovery of gold and the improvement of gold mining and smelting technology, gold became an effective tool for promoting inflation, and this is what Bryan (and his followers) tried to obtain through silver.

The banking panic of 1907 produced an apparently irresistible pressure for banking reform.However, we have reason to believe

Letter, at least the last measure against this panic, the consistent restrictions on the exchange of deposits and cash by the banks, is a cure

Good strategy, it halted this liquidity crisis, thus preventing good banks from failing and falling prey to a mass panic.

Moreover, it has been followed by a short-term austerity followed by an economic recovery and

expansion.

Reforms eventually enacted by the Federal Reserve System designed to prevent any such panics or exchanges in the future

restrictions, but in fact, it did not prevent the worst panic in the history of the United States economy, the most severe exchange restrictions and bank

collapse of the banking system (these disasters occurred in 1930-1933, ending with the March 1933 bank shutdown).

The same reform, intended to promote monetary stability, brought about a 30-year period of relatively greater instability in the money stock

, a level of instability higher than any experienced before the existence of the Federal Reserve System for which our data come into existence, and

And, perhaps even higher than any level experienced in the entire history of the United States (except during the American Revolutionary War).

The boom in the stock market and the shadow of inflation during World War I led to the widespread belief that the - * century - *

was a period of inflation, and the economic collapse of 1929-1933 was a reaction to it.But actually,

It should be said that the -*century-*s was a relatively deflationary period: from 1923 to 1929 --- by comparing

To avoid the interference of cyclical effects compared to the peak years of the business cycle --- wholesale prices fall at a rate of [-]).

While the money stock grows at the rate of "yearly", the growth rate of the money stock is roughly the growth required by the expansion of output

speed.Wholesale prices fell during the 1927-1929 business cyclical expansion, which was 1891-1893

Wholesale prices fell during the expansion (albeit only slightly) for the first time in [-] and have not since

This has happened before.

The currency collapse of 1929-1933 was not an inevitable consequence of what had happened before, but

The result of policy measures implemented over a period of time.As we have already mentioned, during this period, the

Stop this currency collapse through the implementation of various policies.Although the Federal Reserve System claims that what they practice is

An easy monetary policy, but in fact, they have a very tight monetary policy.

Supporters of the New Deal strongly supported easy monetary policy.Moreover, in the late 20s there was a rapid

Monetary expansion, which is mainly caused by two reasons, namely, the rise in the price of gold and the expansion of Hitler's power

Zhang, they facilitate the flow of capital to the United States.This rapid monetary expansion was due solely to the rise in the price of gold, unlike

Monetary policy is irrelevant.While this rise had the expected immediate impact, some of the measures that went along with it——

Especially the nationalization of gold, the removal of the Gold Clause, and the New Deal program beyond monetary policy --

Business investment had the opposite effect.During this period, the new powers of the Federal Reserve System

A major monetary measure was the doubling of the required reserve ratio in 1936 and 1937.The adoption of this measure

The withdrawal was not intended to have an immediate and significant deflationary impact, but was primarily intended as a "precautionary" measure.federal

The reserve system is content with such a state of sufficient and widely distributed excess reserves.In this case, coupled with financial

The Treasury Department's gold hedging policy, a measure of the Federal Reserve System, had a severe deflationary effect.

On the face of it, the goal of the silver purchase programs of the 20s was to increase the share of silver in national currency reserves.

Ratio in China, increasing it from 1/6 to 1/3, but in fact, its main purpose is to aid silver miners.The item

划在1933-1960年间的总支出为20亿美元，即为使美国的一个白银矿工得到1美元的收益，至少需支出5美元。然而，使白银比例增加到1/3的目标却从来没有实现过。但

It was this silver purchase program in the 20s that actually caused China to suffer severe deflation for several years, making

China is permanently off the silver standard, Mexico is temporarily off the silver standard, and it counts as an economic

and a major factor in weakening China politically.

It was widely believed that World War II would be accompanied by severe unemployment.The Federal Reserve System had prepared for this outcome,

And embraced the bond support program because the Federal Reserve System thought it would be compatible with the easy money needed after the war

Monetary policy is consistent.In this case, inflation (rather than deflation) suddenly arrives and becomes the bigger crisis, while

And with the added boost of inflation from the Korean War, the Federal Reserve System was eventually forced to abandon the bond-backed program.

Pull this self-binding chain.

What happened in the United States also happened abroad.It was widely believed that the quantity of money had an effect on the economy

has little effect unless controls on the quantity of money can be used as a means of keeping long-term interest rates at

would be lower than it would have been in the absence of controls; such controls on the quantity of money might in turn raise the level of aggregate demand

High, if not, then this level of aggregate demand will be imperfect.Loose monetary policy is almost set in stone

prescription, and inflation is the almost invariable outcome.Only by abandoning easy monetary policy can inflation

enough to be terminated.A conclusion drawn from this again is that, generally speaking, money has a certain effect on the economy.

Compared with the decline in the velocity of money circulation during the 3/4 period of the century-old monetary history, almost the entire post-war period

During this period, the velocity of money circulation has continued to increase.Much of this rise is apparently due to the wartime decline in the velocity of money.

The callback made.However, the magnitude and duration of this rise is so large that we cannot just

Just use this as an explanation.Numerous explanations have been offered: from the wider availability of money substitutes and their

More benign properties, to rising interest rates, to people's fear of inflation.However, we tend to believe that

While these factors may all have played a role, the overshooting of the wartime decline in the velocity of money

Some of the increase in the velocity of money is mainly due to the general public's increased confidence in the stability of the economy.with this explanation

Consistently, we expect the downtrend to resume in the longer term.However, we put too much faith in these superficial

so much so that we can never be sure how deceitful they are.Before making a final distinction between these interpretations, I

We will have to wait for practice to reveal the truth.

However, we are certain of one thing, and that is that the evolution of the currency will continue to be a witness to its future course

People provide contingencies—and if scholars and politicians who study money ignore these contingencies, the consequences will be

Incredible.

The close relationship between changes in the money stock and changes in other economic variables does not, by itself,

The cause, nor the direction of the impact of the change, can be explained.Monetary changes can occur independently of other economic variables

National income and prices may also vary independently of changes in the currency.both

may interact, and there may be some independent factor in the variation of each; or, both may be influenced by

Changes occur accordingly due to the influence of changes in the third factor.Analyzing important, wide-ranging

Qualitative evidence for available statistics is of great value, since it can add to these possible explanations for existing statistics.

Discrimination.At least in some cases, we can go beyond the numbers themselves to understand the prior circumstances that caused this particular change

When we process the statistics of these special changes through computers, their particularity will no longer exist.

From what we have said before, it is well established that movements in currencies are in fact often independent

This is true because changes in currency are not usually the direct or inevitable result of contemporaneous changes in business conditions.

Perhaps the most obvious example is the monetary expansion of 1897-1914, which was worldwide and

Reflecting increased gold production.The increase in gold production is partly the result of falling price levels in previous decades.

Therefore, it can also be said to reflect the interaction between changes in the currency and changes in the economy.But obviously, this time

Monetary expansion is not caused by contemporaneous increases in national income and price levels.Because pure national income and

An increase in the price level generally causes a decline in gold production worldwide, and under the gold standard, national income

Increases in income and price levels can induce gold outflows from individual countries.If the co-movement of money and national income does not

If they are not completely consistent, then the direction of influence must be from money to national income.

The two major increases in the stock of money experienced during World War I and World War II were almost equally pronounced.in two world wars

In the early stages of the war, as the belligerents used all their rapidly available resources to purchase American war materials, Huang

Gold flowed into the United States in large quantities, and the growth of the money stock during this period reflected this fact.Due to the flow of gold in 1914

years ago, so the inflow of gold during this period was not a by-product of changes in domestic and foreign economic activities over the same period

products, but the result of the outbreak of two world wars and of calculated political decisions by the political authorities of the belligerent countries.in two

During the latter stages of World War I, the increase in the stock of money in the United States reflected the American authorities' desire to finance war expenditures.

political decisions.These policies included the realization of a large expansion of the quantity of high-powered money, and also the continuation of the

The growth of the money stock.Again, this shows that if the money stock, nominal national income, and price level move differently

If it is not caused by a common cause, then the direction of influence must be from money to national income.

The restoration of minted payments and the Silver Age reflect the independence of the great changes in the currency, as well as the

The rather complex role and interaction between change and business change. 19s Response to Restoration of Mint Payments

Various pressures for and against, as well as the pressure of free casting of silver coins in the %"century"# era, are the main factors that determine the development of events.

important factor.Although these two main factors are not independent of the long-run course of economic development, both are to some extent independent of the course of economic activity over the same period.Both were also greatly influenced by the course of these events: opposition to the restoration

The pressure to re-mint payments, and to favor the free minting of silver coins, was either due to a slowing down of the pace of commerce or

fell, or was reinforced by falling agricultural commodity prices.More importantly, the agricultural harvest situation at home and abroad

conditions, the development of the railway sector in the 19s, and the development of the London money market in the 70s, etc.

Contemporaneous events have a major influence on the period in which currency values ​​fluctuate due to political pressure, and these fluctuations

Movements, in turn, affect business conditions and political positions.

The establishment of the Federal Reserve System provided scholars of monetary issues with a means of conducting research to determine the direction of influence.

an alternative to controlled experiments that is closer to that usually available to sociologists

like.Sometimes the Federal Reserve System is just a means by which other powers work—Interwar

, and for much of the '&century(& decade, the Federal Reserve System was largely passive;

Moreover, after World War II, the policy of the Federal Reserve System to support the price of government securities made it almost lose its independent agency.

room for sex.But the establishment of the Federal Reserve System conferred power on a small number of people, and that power was

They are exercised repeatedly, through a deliberate process, to alter the course of events in significant, definite ways—these

The procedure described here is similar to the method of controlled experiments.Indeed, the actions of monetary authorities are greatly affected by their

social opinion and perceptions of how they exercise power.The attitude of the monetary authorities, the experiments they conduct, and

Their interpretation of the experimental results, etc., depends to a large extent on the development of contemporaneous events and on the currency

awareness of the phenomenon.For natural scientists to decide what kind of experiment to conduct and based on previous experiments and contemporaneous knowledge

The same is true for the interpretation of experimental results by the knowledge system.In both cases, relying on existing knowledge

The system does not alter scientific independence from earlier or contemporaneous course of events in changes in the control variables.

In both cases, the meaning of the above statement is only that later scholars can interpret the

The results of these experiments were reinterpreted and led to different conclusions than the original experimenters.

In practice, too, it is always difficult to ascertain the precise impact of monetary authorities' measures, and it is often not

possible.The actions of monetary authorities are usually taken in the interplay of many other factors, so it is difficult to make clear observations

Whether the results obtained are caused by the measures of the monetary authorities or by some environmental factors.for self

However, in terms of scientists' experiments, this is also true.No experiment can be completely controlled, and

Most experiments contribute little to updating a body of knowledge that has already been tested and validated.exactly that

Some few decisive experiments make the experimental subject suddenly clear --- let us for those less important but in the decisive

Qualitative experiments are done before and very necessary experiments are turned a blind eye.

In the monetary history since the establishment of the Federal Reserve System there are three parallels to this decisive experiment:

action.In all three cases, the Federal Reserve System had planned large-scale policy measures, which

These policy measures should not be viewed as an inevitable economic consequence of contemporaneous changes in nominal incomes and prices.with natural scientists

As in the definitive experiments of , the results of these measures are so consistent and unambiguous that their interpretation cannot be questioned.These were the three periods in which the Federal Reserve had a highly binding committee order (and it was the only

three periods).

The author has something to say:

The content of this chapter is the history of American currency (Friedman) excerpted by the author, and the actual content goes to Weibo