The Money Illusion and Related Writings

As was evident in his testimony in support of the Goldsborough Bill in 1922, the recession of 1920–21 in the American economy had left a mark on the way Fisher presented the case for stabilizing the dollar. (See the editorial commentary in Volume VI.) Thereafter he assigned a heavy weight to the argument that stability of the general price level would tend to minimize economic fluctuations. But the post-World War I recession also brought to the fore another way of thinking about the route to stabilization: i.e., a program of counter-cyclical spending on public works. In American official circles in the 1920s, this alternative to Fisher’s monetary approach to policy had the inside track.