Key Currencies and Internal vs. External Monetary Stability

This our weekly discussion of the price level as it relates to Perry Mehrling's money view. The price level is the average price of goods in terms of money or, equivalently, the price of money in terms of goods. But what determines the price level? Why is the price level important? And how does it fit into the money view?

This week, we're discussing a 1934 paper by John H. Williams entitled "The World's Monetary Dilemma—Internal versus External Stability," which is an early formulation of the "key currency" approach to international monetary stabilization whereby we can stabilize the most important currency or currencies used in international and the rest of the periphery of the system will stabilize around that core.

The World's Monetary Dilemma—Internal versus External Stability