Page:Stabilizing the dollar, Fisher, 1920.djvu/240

186 during the 3d interval by 1%, and again be foiled by the 1% rising tendency.

The same reasoning gives precisely the same result for each subsequent adjustment interval, as long as the 1% upward tendency continues.

That is, in each case, the new index number is the last index number (101) minus the 1% influence toward par, due to adjusting the dollar's weight, plus the 1% tendency to rise.

Thus, at each successive milestone, the formula for finding the new index number in terms of the old is 101 - 1 + 1 = 101, as long as the 1% upward tendency exists.

The sequence is:

When the downward tendency begins, the price level in the first adjustment interval will fall from 101 to 99. The reason is that, during this interval, the 1% influence exerted by the adjustment in the weight of the dollar is reënforced by the assumed tendency to fall 1%. That is, the index number after the first interval of fall will be 101 - 1 - 1 = 99.

The index number, 99, is now 1% below par, i.e. the deviation is now -1%. The dollar will, therefore,