SEMINAL WORK IN MONETARY ECONOMICS

FISHER, IRVING.

Die Kaufkraft des Geldes. Ihre Bestimmung und ihre Beziehung zu Kredit, Zins und Krisen.

Berlin, Verlag von Georg Reimer, 1916. Royal8vo. Bound in a nice contemporary half calf binding with five raised bands and gilt lettering to spine. Stamps to titlepage, otherwise fine. XX, 435 pp. + one folded plate.

First German edition of Fisher's seminal work in which he introduced his famous equation of exchange, known as the Fisher Equation. "No other mathematical formulation in economics, perhaps no other in history save that of Albert Einstein, has enjoyed a greater vogue, and this continues without diminution to our own time." (Galbraith. A History of Economics, Pp. 152-3).

The Fisher Equation states MV=PT. (M=stock of money, V= the velocity of circulation of money, P=price level, T=amount of transactions carried out using money).
In theory this means that by varying the supply of money, while the velocity and the volume of trade remained the same could raise or lower the level of prices. Upward movements could be arrested by reducing the money supply.

"This was a mojor, even awe-inspiring, step in the history of economics. [...] Later, in the early years of the Great Depression, Fischer and his disciples would be at the center of policy; they would urge and, in some measures, create a plan to arrest the punishing price deflation of the time. [...] With Fisher the long history of money is brought into the modern era."

Irving Fisher is regarded as being one of the earliest American neoclassical economists and the first celebrity economist. Fisher was also the first economist to distinguish clearly between real and nominal interest rates and he was by Milton Friedman called "the greatest economist the United States has ever produced."

Order-nr.: 51517