Would a further expansion of money be 'injurious'? January 25, 1937

摘要

In the past three years the volume of circulating deposits (adjusted demand deposits) plus currency outside banks has expanded by over $11 billion or 55 percent. It is approaching $5 billion in excess of the figure in 1929. Excess reserves are well over $2 billion. The Board has the power to raise reserve requirements further "to prevent injurious credit expansion". The problem is to determine whether the present volume of money is deficient, adequate or excessive. Another way of stating the same thing is to determine whether any further expansion is justified and if so how much, or whether and at what point further expansion would be "injurious". An attempt at the solution of the problem entails a discussion of what criterion can be used to determine the adequacy or excessiveness of the volume of money and what the prospects are for further expansion if no action is taken.