Page:Stabilizing the dollar, Fisher, 1920.djvu/278

224 in circulation has been proved both by theory and by experience to be illusory.

N. "It is a fiat money system." This misunderstanding is the opposite of the last and even more absurd. It is not a fiat money system ; for the paper money, under it, is redeemable and dependent for its value on the gold in which it is redeemed.

2. Alleged Defects

A. "A goods-dollar is not ideal." Doubtless this is true. But our present gold dollar is still further from the ideal! It is significant that those who offer this "objection " do not suggest some third kind of dollar which might, practically, be used.

The discussion of an ideal dollar is purely academic. It will be time enough to discuss the merits of a marginal-utility unit of value, a labor unit, or a unit consisting of a given fraction of the National income, when any of these units can be statistically fixed, that is, when an index number in terms of such a unit is forthcoming. Until that time the ideal standard, if such there be, has about as much practical availability for human use as the money of the planet Mars. The only practical question is that already discussed in Appendix I, § 3, as to what is the best index number available.

It might be advantageous, were it possible, to distinguish between that part of a given change in the value of the dollar which is due to money and that part which is due to goods. And this could be done by the plan if there were any reliable index number of "absolute value." By employing such an index number, if it existed, we could stabilize the dollar "absolutely." Practically, of course, we can only measure the value of money relatively to other goods.

This same answer applies to those who have the idea that, instead of a constant price level, a slightly falling or a slightly rising or a cyclically changing price level