Money Supply Control in the U.K.
The British debate on money-supply theory contains several layers, all confused. In the wake of Keynes’s General Theory (1936), many economists, admittedly able to cite some extravagant GT language, maintained that money-supply was irrelevant to, say, price-performance because monetary velocity was infinitely malleable; prices, they argued, were determined by properties of wage-bargains and by the curve of investment expenditures; the level of nominal national expenditure thus becoming determined, velocity became a function of money-supply; the greater was money supply, the less would be monetary velocity. This view became predominant in the British Treasury and indeed has only quite recently lost force in Great George Street.
KeywordsMonetary Policy Liquid Asset Treasury Bill Monetary Expansion Monetary Growth
Unable to display preview. Download preview PDF.
- 1.Warren L. Smith and Raymond F. Mikesell, ‘The Effectiveness of Monetary Policy: Recent British Experience’, Journal of Political Economy, vol. 65, No. 1, February 1957, p. 25. A rather lonely criticism of this sort of approach was made by J. R. Sargent in a letter to The Economist, 19 May 1956.CrossRefGoogle Scholar
- 3.Cf. W. M. Dacey, ‘The Floating Debt Problem’, Lloyds Bank Review April 1956, pp. 24–38; also Dacey’s British Banking Mechanism (London: Hutchinson; 1951), ch. 10.Google Scholar
- I Discuss the matter in M. L. Burstein, Money ( Cambridge, Mass.: Schenkman Publishing Co.; 1963 ), pp. 311–13.Google Scholar
- 6.G. T. Pepper and G. E. Wood, ‘“Keynesian” and “Monetarist” Indicators of the U.K. Economy’, ch. 15 of Allingham and Burstein (eds.), Resource Allocation and Economic Policy (London: Macmillan; 1976) on p. 183. Cf. also their note on p. 198.Google Scholar