Out of the realisation of the central bank’s power to determine the volume of credit there arose the notion that it should consciously direct monetary policy along ‘scientific lines’. The question then arises: What is to be the criterion of this ‘scientific’ management? The criterion which has so far usually been adopted, that of the stability of the general price level, has been suspect in theory and just as unfortunate in practice…We have yet to wait for the formulation of some other criterion in clearly delineated terms to allow of its adoption as a rule of...
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