Page:Stabilizing the dollar, Fisher, 1920.djvu/159

2] In addition to these features of the plan itself should be mentioned the tacit assumption that we retain a sound banking system. Without such, the effectiveness of the stabilization plan would be quite lost.

2. The Crux of the Plan

The crux of the plan lies in (4)—the provision for adjusting the weight of the gold bullion dollar. This is the adjustment rule by which the index number regulates the dollar's weight. Its significance is that:

To keep the dollar from shrinking in value we make it grow in weight, thus recognizing that a depreciated dollar is a short-weight dollar; and, reversely, to keep the dollar from growing in value we make it shrink in weight, thus recognizing that an appreciated dollar is an overweight dollar.

Or, in alternative terms, since a heavier or lighter dollar simply means a lowered or raised price of gold, we may say that:

To keep the price level of other things from rising or falling we make the price of gold fall or rise.