Hi
In Walter Isaacson’s “Benjamin Franklin” p. 63/64, Isaacson writes: " Franklin argued that the lack of enough currency caused interest rates to rise, kept wages low and increased dependence on imports".
I understand the interest rates being raised since less money circulating makes it more expensive to borrow, hence higher interest rates.
What about low wages? and import dependence? How does a shortage of money supply lower wages?
I look forward to your feedback.
davidmich
What about low wages? and import dependence? How does a shortage of money produce lower wages and import dependence?
I look forward to your feedback.
davidmich
I think you can summarize that statement as “1700s economics is largely inapplicable to today.”
Trying to parse further meaning from it is not enlightening about today, and IMO not very enlightening about the 1700s either.
Lack of adequate money growth causes unemployment. Unemployment causes a downward pressure on wages overall.
High value of the dollar means that imported goods are less expensive, this puts american goods at a disadvantage.
I’m curious as to whether Benjamin Franklin’s insights on money supply were known/common knowledge at the time. Which economists would he have read?