tag:blogger.com,1999:blog-2098432983500045934.post2101228131541520199..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Alexander Hamilton's "National Bank"The Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-2098432983500045934.post-39517080435135130762023-04-06T10:54:41.725-04:002023-04-06T10:54:41.725-04:00If I read Smith correctly, he said that the use of...If I read Smith correctly, he said that the use of paper money could <i>double</i> the total value of transactions that take place in the economy. That was in 1776. <br /><br />In 1790 Hamilton said paper money could lead to two or three times the value of transactions that take place using gold and silver money. Double or even triple, he said, not just double.<br /><br />In <a href="https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch23.htm" rel="nofollow">Chapter 23</a> Keynes quotes Heckscher quoting the head of the East India Company from 1668, who said that using "bills of debt" as "currency" (that is, using a form of paper money) “will certainly supply the defect [read: <i>deficiency</i>] of at least one-half of all the ready money we have in use in the nation”.<br /><br />The estimates, chronologically:<br />in 1668, a 50% increase in economic activity;<br />in 1776, a 100% increase in economic activity; and<br />in 1790, a 100% to 200% increase in economic activity,<br />due to the use of paper money.<br /><br />These days we don't use gold and silver for money. We have "base money" instead. In the mid-1980s the quantity of M2 money briefly reached 12 times the quantity of base money. It should be noted, however, that two decades later, when private-sector debt was much higher, 9 times the quantity of base money was not enough to prevent financial crisis.<br /><br />https://fred.stlouisfed.org/graph/?g=12f2h<br /><br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.com