OUR NEW MONETARY STANDARD: THE MEASUREMENT AND EFFECTS OF PRICE UNCERTAINTY, 1880–1973*

U. S. annual inflation rates over the last century are analyzed in an attempt to compare price unpredictability in the recent period with that during the 1880–1915 gold standard period. The movement from negative price change autocorrelations in the earlier period to strongly positive price change autocorrelations in the recent period, is shown to imply an upward shift in the amount of long-term relative to short-term price uncertainty. Empirical evidence on the relationship between the demand for money and actual price change, on the adjustment of interest rates to price changes and on the change in the composition of new corporate debt issues is presented. Evidence suggests that only over the last decade has the public generally recognized the fundamental change from a commodity to a fiduciary standard that has occurred in the underlying monetary framework.