Chapter 11

227 Barry Eichengreen is the preeminent scholar on this topic . . . For Eichengreen’s views on the prospects for multiple reserve currencies, see Barry Eichengreen, Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System, Oxford: Oxford University Press, 2011; and Barry Eichengreen, “The Dollar Dilemma: The World’s Top Currency Faces Competition,” Foreign Affairs, September/October 2009: 53– 68.

236 “Countries that left gold were able to reflate their money supplies . . .” Ben Bernanke, “The Macroeconomics of the Great Depression: A Comparative Approach,” Journal of Money, Credit and Banking 27 (1995): 1–28.

238 In support of his thesis that gold is in part to blame . . . Bernanke, op. cit. Bernanke’s specific model states:

M1 = (M1/BASE) × (BASE/RES) × (RES/GOLD) × PGOLD × QGOLD

Where

M1   =   M1   money   supply   (money   and   notes   in   circulation  plus commercial bank deposits),

BASE = monetary base (money and notes in circulation plus reserves of commercial banks),

RES = international reserves of the central bank (foreign assets plus gold reserves), valued in domestic currency,

GOLD = gold reserves of the central bank, valued in domestic currency

= PGOLD × QGOLD,

PGOLD = the official domestic currency price of gold, and

QGOLD = the physical quantity (for example, in metric tons) of gold reserves.

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