This chapter discusses four areas of monetary theory on which the ideas of Smith and Hume have left their imprint: (1) the overissue of bank liabilities, (2) the price-specie-flow mechanism (PSFM), (3) the need for a lender of last resort in a competitive banking system, (4) real-bills doctrine...

Monetary-policy rules arise when the value of a medium of exchange exceeds its cost of production. Two classes of monetary rules can be identified: (1) price rules that target the value of money in terms of a real commodity, e.g., gold, or in terms of an index of prices, and (2) quantity rules...

Monetary-policy rules are attempts to cope with the implications of having a medium of exchange whose value exceeds its cost of production. Two classes of monetary rules can be identified: (1) price rules that target the value of money in terms of a real commodity, e.g., gold, or in terms of...