part ii INFLATION AND DEFLATION 169

adhering to the gold standard, had contractedto pay in terms of gold.

Let us begin at the beginning of the argu-ment. There is a multitude of real assets inthe world which constitute our capital wealth—buildings, stocks of commodities, goods incourse of manufacture and of transport, and soforth. The nominal owners of these assets,however, have not infrequently borrowed moneyin order to become possessed of them. To acorresponding extent the actual owners of wealthhave claims, not on real assets, but on money.A considerable part of this “financing” takesplace through the banking system, which inter-poses its guarantee between its depositors wholend it money, and its borrowing customers towhom it loans money wherewith to finance thepurchase of real assets. The interposition ofthis veil of money between the real asset andthe wealth owner is a specially marked charac-teristic of the modern world. Partly as a resultof the increasing confidence felt in recent yearsin the leading banking systems, the practicehas grown to formidable dimensions. Thebank - deposits of all kinds in the UnitedStates , for example, stand in round figures at$50,000,000,000; those of Great Britain at£2,000,000,000. In addition to this there isthe great mass of bonded and mortgage in-debtedness held by individuals.

All this is familiar enough in general terms.We are also familiar with the idea that a changein the value of money can gravely upset the

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