Interst rate policy and reconstriction requirements

Abstract

The article sums up the author’s enquiries into policies aiming at lowering the cost of money. Illustrating his views by a historical and critical review of the advantages and disadvantages of such policies, he is led to conclusions substantially confirming current opinions unfavourable to a cheap money policy. However, the author does not limit his study to the present post-war period, but extends it to the whole period running from the close of the First World War down to the present day. In this long-term survey, the fundamental conditions regulating the rate of interest are shown, in so far as they determine the general economic equilibrium, and the disturbing effects caused by artificial monetary manoeuvres. Viewed against this background, the monetary theories on interest rate may seem to be reactions caused by the special monetary vicissitudes of the last thirty years, rather than the expression of general economic laws.

JEL: E43, E52