Page:Stabilizing the dollar, Fisher, 1920.djvu/230

176 But the stabilization plan would afford a complete control of the amount of gold, measured in dollars, without forbidding or much affecting the inflow or outflow of gold measured in ounces!

Had we had stabilization in 1915 we would have been protected against gold inflation, from which we have suffered so grievously. When the gold began to flow in and prices to rise, our gold dollar would have been enlarged. Also the number of gold dollars in the country would have been kept from increasing, despite the increase in the physical amount of gold. Finally the price level would be kept from rising.

Likewise we would have been defended against a drain of gold and would have needed no embargo. If gold began to leave us and prices to fall, gold dollars would be lightened, their numbers would be thereby kept from decreasing, despite the decrease in the physical amount of gold, and the price level kept from falling. If, then, the United States should "go it alone," we would be emancipated from the present involuntary "entangling alliance" of our currency with foreign currencies.

Implied in the last would be the emancipation of our price level from its entangling alliance with foreign price levels. The price level of each country now depends on that of those other countries which have the same monetary standard. The "High Cost of Living," one of the manifestations of inflation, communicates itself from one country to another having the same standard and no one country can avoid the common contagion so long as it has the common unstable unit.

In short, under our present system our money, credit, and price level are far more internationally entangled than they would be if we had stabilization. So long as we let the gold standard drift we are helpless to protect ourselves from the effects of our neighbors' acts on that standard. The close of the war makes us especially liable to the influence of changing