EVILS OF DEFLATION.

Auckland Star, Volume LXIII, Issue 140, 15 June 1932, Page 6

EVILS OF DEFLATION.

The banker -whose views you published on the 9th inst. is apparently determined to prevent any effort being made in this country to avoid the evils of deflation; although Sir Kdward Cook, governor of the National Bank of Egypt (of which Sir Otto Niemcycr is a director) recently described the deflation of tlie last few years as perhaps the biggest curse that has fallen on mankind in recorded history; and although the Macmillan Committee" after eighteen months' consideration of the problem, emphatically condemned a continuance of the existing low level of prices as disastrous to all countries alike. "While world prices are depressed local prices can onlybo raised to a just level and maintained at that level in company with a high rate of exchange, the disadvantages of which are trivial in comparison with the stagnation, unemployment and the forming adrift of" youth which characterise the condition of deflation. The banker's defence of the exchange is * travesty of logic; be says "a comparison of our trad© fignrea clearly indicates that no increase in the exchange rate is warranted," but that the exchange pool should be continued to prevent a rise; obviously he does not believe his own figures. A.G.