Thus unrestricted deposit and unrestricted redemption would go on substantially as at present, the one tending to increase and the other to decrease the volume of bullion certificates, that is, the virtual gold in circulation.
In short our gold-standard system may be pictured as a lake of gold, physically in storage but circulating through yellowbacks, a lake fed by miners and importers and drained by jewelers and exporters.
This system, the lake and its inflow and outflow, would continue unchanged. Only the terms on which gold would be deposited and withdrawn would be changed.
8. Periodical Variations of Weight Based on Index Numbers
We find, then, in answer to the first of our three questions that a periodical variation of the dollar's weight can be made at will, and that, too, without changing, in the least, the nature of the mechanism by which the gold standard now operates.
We are now ready for the second question: What criterion is to guide the Government in making these changes in the dollar's weight? Am I proposing that some Government official should be authorized to mark the dollar up or down according to his own caprice? Most certainly not. A definite and simple criterion for the required adjustments is at hand—the now familiar "index number" of prices. The Bureau of Labor Statistics, which publishes our best present index number, or the Bureau of Standards or other suitable Government office, would be required to publish this number at certain stated intervals, say bimonthly.
