by Machlup
[Front Matter and Series Information]: Title page, series information, and biographical sketch of Fritz Machlup, including his previous works on international payments and gold. [Introduction: Price, Exchange Value, and Book Value]: Machlup introduces the distinction between the price, exchange value, and book value of gold. He argues that since the U.S. suspended gold sales in August 1971, the dollar price of gold has become a mere accounting book value rather than a market price. [The Economic Burden of Exchange-Rate Realignment]: The author analyzes the economic costs of adjusting exchange rates, distinguishing between transitional costs, permanent transfers of output, and 'mercantilistic pseudo-burdens.' He argues that these economic effects are independent of whether the adjustment is achieved through changing the book value of gold. [The Internal Politics and Mechanics of Adjustment]: Machlup critiques the political desire to use gold devaluation as a 'cosmetic' tool to hide the responsibility for currency appreciation. He explains that an American change in the book value of gold does not automatically change market exchange rates, as those are determined by the intervention prices of foreign central banks. [Central Bank Balance Sheets and Reserve Purchasing Power]: This section examines how changes in the book value of gold affect the balance sheets of central banks and the purchasing power of reserve assets like SDRs. Machlup notes that uncertainty regarding gold valuation has made gold-guaranteed reserves illiquid, effectively demonstrating a form of Gresham's Law. [The Future of Gold Convertibility and Newly Mined Gold]: Machlup argues against a return to gold convertibility, describing it as an obsolete 'Rube Goldberg contraption.' He discusses the specific case of South African gold sales to the IMF and concludes by advocating for a new international monetary order based on small, frequent parity adjustments and wider exchange rate bands. [Publications of the International Finance Section]: A comprehensive list of publications by the International Finance Section at Princeton University, including Essays, Studies, Special Papers, and Reprints in International Finance up to 1971.
Title page, series information, and biographical sketch of Fritz Machlup, including his previous works on international payments and gold.
Read full textMachlup introduces the distinction between the price, exchange value, and book value of gold. He argues that since the U.S. suspended gold sales in August 1971, the dollar price of gold has become a mere accounting book value rather than a market price.
Read full textThe author analyzes the economic costs of adjusting exchange rates, distinguishing between transitional costs, permanent transfers of output, and 'mercantilistic pseudo-burdens.' He argues that these economic effects are independent of whether the adjustment is achieved through changing the book value of gold.
Read full textMachlup critiques the political desire to use gold devaluation as a 'cosmetic' tool to hide the responsibility for currency appreciation. He explains that an American change in the book value of gold does not automatically change market exchange rates, as those are determined by the intervention prices of foreign central banks.
Read full textThis section examines how changes in the book value of gold affect the balance sheets of central banks and the purchasing power of reserve assets like SDRs. Machlup notes that uncertainty regarding gold valuation has made gold-guaranteed reserves illiquid, effectively demonstrating a form of Gresham's Law.
Read full textMachlup argues against a return to gold convertibility, describing it as an obsolete 'Rube Goldberg contraption.' He discusses the specific case of South African gold sales to the IMF and concludes by advocating for a new international monetary order based on small, frequent parity adjustments and wider exchange rate bands.
Read full textA comprehensive list of publications by the International Finance Section at Princeton University, including Essays, Studies, Special Papers, and Reprints in International Finance up to 1971.
Read full text