Thomas Tooke

Inflation as a monetary phenomenon during the greenback period.

In Monetary depreciations, The Greenback inflationary period on June 9, 2012 at 8:48 pm

As Mitchell wrote in 1908:

“When two countries have similar monetary systems and important business relations with each other, the movements of their price-levels as represented by index numbers are found to agree rather closely.”

This comment from Mitchell raises the question about the very different inflation indexes between Hong-Kong and the US despite sharing the same currency in the last question. Obviously the method of computation of those indexes include different items.

“This agreement is so strong that similarity of movement is usually found even when comparisons are made with materials so crude as index numbers compiled from unlike lists of commodities and computed on the basis of actual prices in different years.  It is therefore a highly significant fact that the  movements of the price-level in the United States during the years of the paper standard were almost wholly unlike the contemporary movements of the price-level in England and Germany. ”

“To facilitate comparisons between the movements of the price-levels in these three countries, Professor Falkner had Sauerbeck´s English table, and Soetbeer´s German table recomputed on the basis of his own American table — namely, actual prices in 1960 == 100. The results — reproduced in Table 6 — show a general agreement between the English and German index numbers and marked differences between both of these index numbers and the Americna index numbers during the period of the greenback standard. These differences are greatest during the years of high premiums on gold and decline with the premium as the date of  resumption is approached. After resumption, indeed, the figures indicate a closer agreement between relative prices in the United Sates and Germany than between relative prices in England and Germany. ”

  1. […] monetary based against a large increase in output. As a reminder here is the historical data on Greenback price of […]

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