Irving Fisher ' s Search for Stable Money: What We Can Learn

ConclusionIn thinking about monetary alternatives, there is no better place to start then a review of Irving Fisher ’s work, especiallyThe Purchasing Power of Money.   His insights can guide all those interested in improving the current government fiat money regime and in avoiding the mistakes of the past.  The Fed, in particular, ought to listen to what Fisher had to say about sound money—that is, money of stable purchasing power.  There is no perfect mone tary system, but one needs to understand what a “good system” would look like in order to move in the right direction.  A deep knowledge of monetary theory, monetary alternatives, and monetary history are essential in order to improve the present monetary regime.Fisher (1911: 329) sought to avoid those reforms that “would be subject to the danger ofunwise or dishonest political manipulation.” That is wise advice.  We cannot assume that public officials have perfect information or will act in “the public interest.”  That is why James Madison, the chief architect of the Constitution, wrote:The only adequate guarantee for the uniform and stable value of a paper currency is its convertibility into specie —the least fluctuating and the only universal currency. I am sensible that a value equal to that of specie may be given to paper or any other medium, by making a limited amount necessary for necessary purposes;but what is to ensure the inflexible adherence of the Legislative Ensurers to their own princi...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs