John F. Nash, Jr., who shared the Nobel Prize in 1994 for his analysis of game theory and was the subject of the Academy-Award Winning movie A Beautiful Mind, offered a keynote address during Saturday’s annual Carroll Round, an annual economics conference at Georgetown.

Nash, currently a senior researcher in the Mathematics Department at Princeton University, addressed students in the ICC Executive Room about the management of money supply and the methods to decrease inflation.

His lecture followed a two-day series of thesis presentations by undergraduate economists from various universities, such as Columbia, University of Chicago, Yale, Stanford and Georgetown’s School of Foreign Service.

Nash, John C. Harsanyi and Reinhard Selten received the Nobel Prize in 1994 for their analysis of equilibria in the theory of non-cooperative games.

Nash described the inflation rate in a country as a measure of the quality of its currency.

“Consider a society where the money in use is subject to a rapid and unpredictable rate of inflation so that money worth 100 now might be worth from 50 to 10 by a year from now. Who would want to lend money for the term of a year?” he asked. “We can see how the `quality’ of a money standard can strongly influence areas of the economy involving financing with longer-term credits.”

Nash said the officials at the central bank of a country can control the inflation rate by controlling the money supply.

“It cannot be irrelevant whether or not the future quality of a currency is really assured or whether instead that it depends on the shifting sands of political decisions or the possibly arbitrary actions of a bureaucracy of officials,” he said.

Nash said he expects the number of currencies to be reduced to a few major currencies as similar monetary unions are established. “There is now the euro and the old inflationary pattern of the Italian lira is past history now. There could be introduced, for example, a similar international currency for the Islamic world or for South Asia or for South America.”

Nash, however, said that he sees the establishment of such monetary unions difficult, pointing to England and Sweden not joining the European Monetary Union.

“We can legitimately wonder how the speediness of its adoption or delays in its adoption might affect the policies operating to control the actual exchange value of the euro,” he said.

Nash said the citizens will be able to compare the quality of the major currencies resulting from these monetary unions by looking at their exchange rates.

“The currencies being compared … can be viewed with critical eyes by their users and by those who may have the option of whether or not or how to use one of them,” he said. “This can lead to pressure for good quality and consequently for a lessened rate of inflationary depreciation in value.”

Nash criticized the Keynesian school of thought in economics, which argues for fiscal expansion as a way to propel an economy out of recession.

“While [Keynesians] have claimed to be operating for high and noble objectives of general welfare, what is clearly true is that they have made it easier for governments to print money,” he said.

Nash said he disagrees with the Keynesian belief that the “customers of a currency” do not need to understand the effects of certain monetary policies pursued by the managers of the economy.

“A process of political evolution might lead to the expectation on the part of citizens in the great democracies that they should be better situated to be able to understand whatever will be the monetary policies which, indeed, are typically of great importance to citizens who may have alternative options for where to place their savings,” he said.

The third annual Carroll Round was sponsored by the School of Foreign Service and the John Carroll Scholars Program.