Real Bills Doctrine

Discipline: Economics

Developed by Scottish economist Adam Smith (1723-1790), real bills doctrine asserts that there can never be an inflationary excess issue of commercial bills and other paper money because each bill represents a real transaction.

Real bills doctrine was later criticized for failing to recognize that the same sum of money can support many bills.

A Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London, 1776)


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