Page:Stabilizing the dollar, Fisher, 1920.djvu/101

14] over to somebody else. Society as a whole is not rid of it. If the shopkeepers, who, under our Santa Claus hypothesis, have already had their till-money multiplied by two, receive, in addition, the surplus cash of their customers, they will be doubly embarrassed with a surplus fund on hand and will, in turn, seek to make some use of it, either by investing it in goods for their business or by depositing it in banks. That is, the expending by each person of his surplus merely results in pushing it along from person to person. The average person still has more money to buy with; but nobody has more goods to sell. The effect on prices will be upward, and this effect will go on until prices have reached a sufficiently high level to stop the process.

Nor can this conclusion be avoided by supposing that most of the money is not expended, but deposited in banks. The bankers whose deposits are thus suddenly swollen will now be the ones with the surplus. Bankers do not wish to have idle reserves, and they will make the increase in the reserves the basis for an increase of business. Moreover, those who deposited the surplus money will draw checks against it in the effort to expend it rather than keep it idle, and these checks will likewise raise prices. And, as the prices rise, the banks' customers will have to keep pace with the rise by enlarging the scale of their operations, loans, and deposits. For instance, a merchant, in order to buy a certain stock in trade with money borrowed at the bank, will have to borrow more because the prices of the commodities he needs have gone up.

In the end, the doubling of society's money will mean