WORLD'S FINANCIAL TROUBLES.

Auckland Star, Volume LXIII, Issue 183, 4 August 1932, Page 23

WORLD'S FINANCIAL TROUBLES.

Dr. Belshaw says that "the two main conditions necessary to an early and substantial rise in prices are a long period of low short-term money rates in the main money markets of the world, and the renewal of international lending on a large scale." Further on, after showing how he would endeavour to effect these loans, Dr. Belshaw says: "Both these suggestions are novel . . . but they are offered in an attempt to find a way out of a desperate crisis, which requires unorthodox measures." Personally, I cannot see anything so very novel in the doctor's suggestions. They certainly do nothing in the way of striking at the root of the world's financial troubles. They simply advocate a somewhat unorthodox method of keeping the world going by another large borrowing scheme, which will in the end land the borrowing parties further in debt than ever to the lenders. I have worked out a better and entirely novel way of solving the world's financial troubles permanently. And the more I compare my scheme with those put forward by other students of finance, the more convinced do I become that I am the only man in the world who has really mastered this great subject to which I have devoted my life. Money is a medium for the exchange of values, or the products of labour, commonly called wealth. Everyone who received money (except banks when they receive money in repayment of overdrafts) either by the sale of goods or as wages, proves that the party to whom the money has been paid has not received anything in exchange, unless he uses that money to repay a loan. When he parts with that money in exchange for some product of labour, then an exchange of values has been effected and the money should become non-existent, cease to circulate and return to the bank. It has been conclusively proved by the Scotch cash credit system and elsewhere, that banks do create money, and a State bank undoubtedly could create all the money annually require', to excßange all the wealth annually produced, borrowing from anyone or anywhere. This being so, the question arises why should New Zealand have to borrow money from anywhere, why cannot it be created through the medium of a central bank as required ? And granting that this can be done—and undoubtedly it could be done if the majority willed it—why should banks havo to pay interest upon deposits? Perhaps Dr. Belshaw will be able to answer this question. KING SOLOMON.