# Low money supply keeps interest rates high/wages low/keeps import dependence high

**URL:** <https://boards.straightdope.com/t/low-money-supply-keeps-interest-rates-high-wages-low-keeps-import-dependence-high/725127>\
**Category:** Factual Questions\
**Created:** [July 14, 2015, 10:39am UTC](https://boards.straightdope.com/t/low-money-supply-keeps-interest-rates-high-wages-low-keeps-import-dependence-high/725127 "2015-07-14T10:39:22Z")\
**Posts on this page:** 5\
**Page:** 1

<div class="post-metadata">

**Author:** ![davidmich](https://avatars.discourse-cdn.com/v4/letter/d/e56c9b/32.png) [@davidmich](https://boards.straightdope.com/u/davidmich)\
**Post date:** [July 14, 2015, 10:39am UTC](https://boards.straightdope.com/t/low-money-supply-keeps-interest-rates-high-wages-low-keeps-import-dependence-high/725127/1 "2015-07-14T10:39:22Z")

</div>

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

---

<div class="post-metadata">

**Author:** ![davidmich](https://avatars.discourse-cdn.com/v4/letter/d/e56c9b/32.png) [@davidmich](https://boards.straightdope.com/u/davidmich)\
**Post date:** [July 14, 2015, 10:40am UTC](https://boards.straightdope.com/t/low-money-supply-keeps-interest-rates-high-wages-low-keeps-import-dependence-high/725127/2 "2015-07-14T10:40:39Z")

</div>

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

---

<div class="post-metadata">

**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\
**Post date:** [July 14, 2015, 12:16pm UTC](https://boards.straightdope.com/t/low-money-supply-keeps-interest-rates-high-wages-low-keeps-import-dependence-high/725127/3 "2015-07-14T12:16:53Z")

</div>

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.

---

<div class="post-metadata">

**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\
**Post date:** [July 14, 2015, 12:56pm UTC](https://boards.straightdope.com/t/low-money-supply-keeps-interest-rates-high-wages-low-keeps-import-dependence-high/725127/4 "2015-07-14T12:56:29Z")

</div>

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.

---

<div class="post-metadata">

**Author:** ![davidmich](https://avatars.discourse-cdn.com/v4/letter/d/e56c9b/32.png) [@davidmich](https://boards.straightdope.com/u/davidmich)\
**Post date:** [July 15, 2015, 11:54am UTC](https://boards.straightdope.com/t/low-money-supply-keeps-interest-rates-high-wages-low-keeps-import-dependence-high/725127/5 "2015-07-15T11:54:32Z")

</div>

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?