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Suppressing Asset Price Inflation: The Confederate Experience, 1861–1865
Author(s) -
Burdekin Richard C. K.,
Weidenmier Marc D.
Publication year - 2003
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbg018
Subject(s) - convertibility , depreciation (economics) , economics , treasury , currency , monetary economics , inflation (cosmology) , bond , asset (computer security) , circulation (fluid dynamics) , commodity , finance , market economy , physics , thermodynamics , computer security , capital formation , archaeology , financial capital , theoretical physics , computer science , history , human capital
Confederate asset price stabilization policies appear to have increased the velocity of circulation and counterproductively channeled inflationary pressures into other areas of the economy. Three successive monetary reforms encouraged holders of Treasury notes to exchange these notes for bonds by imposing deadlines on their convertibility. We show that Confederate funding acts aimed at precipitating the conversion of currency into bonds did temporarily suppress currency depreciation. These acts also triggered upsurges in commodity prices, however, because note holders rushed to spend the currency before their exchange rights were reduced.