Henry Calvert Simons - Henry Simons and The Money Supply

Henry Simons and The Money Supply

Finally, Simons believed the price level needed to be more flexible to accommodate fluctuations in output and employment. To this end, he advocated a minimum of short-term borrowing, and a maximum of government control over the circulation of money. This would result in an economy with a greater tolerance of disturbances and the prevention of "accumulated maladjustments" all coming to bear at once on the economy. In sum, Simons’ chief problem was with a financial system in which the movement of the price level was in many ways beholden to the creation and liquidation of short-term securities. To Simons this threatened financial instability.