RESERVE BANK

Ashburton Guardian, Volume 56, Issue 155, 14 April 1936, Page 5

RESERVE BANK

CRITICISM IN BRITAIN. THE DANGER OF INFLATION. FINANCIAL PRESS’ COMMENT. United Press Association—Copyright - ) LONDON, April 11. The “Economist,” commenting on bank nationalisation in New Zealand, considers the value of an independent central bank as a disinterested adviser of the Government far from negligible. “The fact that New Zealand is dispensing with this safeguard makes it more necessary for the Government to follow a wise and consistent policy,” says the article.

The “Financial News” considers that few economists and bankers will not be disquieted at New Zealand’s turning of the bank into a complete machine for Government expansion through the capital market. “Printing press inflation,” whether the Government liked it or not, would be an inevitable sequel. Apparently the less dangerous inflation now facilitated might not cause immediate alarm, but there was no assurance that a future Government would not take leckless advantage of the dangerous devices now ready to hand. Mr Savage’s good intentions might also suffer from the sheer lack of a grasp of the fundamental economic principles. A Government which linked an expansionary social assistance programme with a policy of exchange appreciation hardly seemed to have a sure grip of realities.