Denationalisation of Money: The Argument Refined
Questions for Discussion
1. Examine the long-held view that there should be only one currency in a country and that it should be controlled by government. Illustrate your discussion with examples from remote and recent history.
2. What are the origins of legal tender? Argue for and against it as the necessary basis of a monetary system.
3. Define money. How is it distinguished from non-money? Argue for and against the concept of a ‘quantity’ of money. Apply the argument to the ‘quantity’ theory of money.
4. ‘It is desirable for government to control money so that it can vary its supply according to the needs of the economy.’ ‘People have been losing confidence in money because it has been controlled by government.’ Discuss.
5. History shows that there has sometimes been lack of confidence in ‘legal tender’ paper currencies. How could a régime of competing paper currencies maintain the confidence of the public?
6. ‘To be trusted, paper money must be convertible into valuable goods or precious metals.’ Do you agree? Discuss the condition in which convertibility is and is not essential.
7. Discuss the view that inflation and deflation would be difficult or impossible if the quantity of money were not controlled by government. Illustrate your answer from the 1929-32 Great Depression and the 1972-75 ‘Great Inflation’.
8. Boom and slump are associated with ‘capitalism’. Are they found in non-capitalist economies? Are they the result of capitalism or other causes?
9. ‘It is politically impossible for a monetary authority subject or exposed to severe sectional pressures to avoid increasing the quantity of money to increase employment, thus creating inflation. The gold standard, fixed exchange rates and other restraints in the way of monetary expansion have been found inadequate.’ Discuss.
10. How would you remove the power of national government to control the international movement of currency? Would international agreement suffice? How could competition in currency be more effective?
