ch. 17 PROPERTIES OF INTEREST AND MONEY 229

It is now apparent that our previous statement tothe effect that it is the money-rate of interest which setsa limit to the rate of output, is not strictly correct. Weshould have said that it is that asset’s rate of interestwhich declines most slowly as the stock of assets ingeneral increases, which eventually knocks out theprofitable production of each of the others,—exceptin the contingency, just mentioned, of a special relation-ship between the present and prospective costs of pro-duction. As output increases, own-rates of interestdecline to levels at which one asset after another fallsbelow the standard of profitable production;—until,finally, one or more own-rates of interest remain at alevel which is above that of the marginal efficiency ofany asset whatever.

If by money we mean the standard of value, it isclear that it is not necessarily the money-rate of interestwhich makes the trouble. We could not get out of ourdifficulties (as some have supposed) merely by decreeingthat wheat or houses shall be the standard of value in-stead of gold or sterling. For, it now appears that thesame difficulties will ensue if there continues to existany asset of which the own-rate of interest is reluctantto decline as output increases. It may be, for example,that gold will continue to fill this role in a countrywhich has gone over to an inconvertible paper standard.

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In attributing, therefore, a peculiar significance tothe money-rate of interest, we have been tacitly assum-ing that the kind of money to which we are accustomedhas some special characteristics which lead to its own-rate of interest in terms of itself as standard being morereluctant to fall as output increases than the own-ratesof interest of any other assets in terms of themselves.Is this assumption justified? Reflection shows, I think,that the following peculiarities, which commonly char-

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