In this paper I argue that the Real Bills Doctrine has been wrongly discredited, and that it ought to displace the Quantity Theory as the dominant theory of money. The discussion begins with the observation that the issue of backed money will not be inflationary as long as central banks follow the real-bills rule of only issuing money to those customers who offer good security in exchange. I then contend that modern paper currencies, which we normally think of as unbacked fiat money, may be (and probably are) backed. If correct, this would imply that the Real Bills Doctrine, and not the Quantity Theory, is a correct model of the value of modern money. The paper concludes by discussing a few controversies in the history of the Real Bills Doctrine, and shows that the major arguments responsible for the defeat of the Real Bills Doctrine contain obvious and serious errors.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by EconWPA in its series Macroeconomics with number
9711001.
Length: 36 pages Date of creation: 04 Nov 1997 Date of revision: Handle: RePEc:wpa:wuwpma:9711001
Note: Type of Document - MS works; prepared on IBM PC ; to print on HP; pages: 36; figures: none. In this paper I argue that the Real Bills Doctrine has been wrongly discredited, and that it ought to displace the Quantity Theory as the dominant theory of money. Contact details of provider: Web page: http://129.3.20.41
For technical questions regarding this item, or to correct its listing, contact: (EconWPA).
Find related papers by JEL classification: E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: