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PURCHASING POWER.

I don't know just what kudos lice in the claim to having invented the phrase "purchasing power." It appears to me to be a most obvious one which comes to mind naturally when thinking of or discussing economic problems. I prefer to use the term "money," although the two terms are not quite interchangeable, and also "money" has the disadvantage of being associated in people's minds solely with banknotes and coins. In reality, the only money there is, is bank deposits. Anyone will exchange his goods for my bank deposit—provided it ie large enough. Notes and coins in the people's pockets may be regarded aa bank deposits temporarily unrecorded. They "have only to be paid in for the whole of the community's money to be represented by bank deposits, in which, case the notes and coin would have no purchasing power at all. Although all money may bo ■regarded as bank-deposits, it does not follow that all bank deposits are purchasing powen And if there is an average of 20 millions always on fixed deposit it follows that twenty millions of the community's total deposits are not available for purchasing. Also with regard to free deposits, no depositor likes to draw down to the last penny. Some people like to keep their deposit up to £100. Others don't like drawing on the last £5. If there be 100,000 bank deposits and the average person avoids drawing on the last £10, that means that another million purchasing power is always locked up. Overdrafts may be likened to deposits created by the purchase, by the bank, of securities. G.C.

Permanent link to this item

https://paperspast.natlib.govt.nz/newspapers/AS19340918.2.65

Bibliographic details

Auckland Star, Volume LXV, Issue 221, 18 September 1934, Page 6

Word Count
269

PURCHASING POWER. Auckland Star, Volume LXV, Issue 221, 18 September 1934, Page 6

PURCHASING POWER. Auckland Star, Volume LXV, Issue 221, 18 September 1934, Page 6

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