TO AVOID SLUMPS.

Auckland Star, Volume LXVIII, Issue 26, 1 February 1937, Page 4

TO AVOID SLUMPS.

NO MORE DEAR MONEY. i J. M. KEYXES , PROPOSALS. " LO.VDO.V, January 12Revolutionary ways of -avoiding sinmp*" are advocated by Mr. J. M. Keyne*, the econoiuiM, i u an article in -The Tinaee." He declare*; •• \v o should now avoid d«r money like " hell-fire.' If we allow the late 01 interest to be affected, we cannot easily reverse the trend. The long-term rato must l.e kept continuously near lie nplimuiii. It scoins certain that within » lew weeks or months nuii-recurreiu investment in increased uoikint- capital will almost be over. Thereto) e. a low rat* of inteient will be required to *tiinulate increased investment <•! the recurrent type, and fill the pap. Thu*. the fatal mistake would l»e t.i .W the tia.]jtioiia! method of ujjili intcreet to damp down the doom. " There_are better alternative methodt available.™ he said. " The CJovrrnnieiit. which was well-rf,l\ ised in inenr debt during the slump. .-!in::!d now adopt the oppoMtc polic> . inv<*ttnent demand is ui(iiase<i by ]<.an t-xit-nditure and <leciorfse>l when loans aje disdiargod, as the armament pix>mamr.ic should I>C financed from laxa'.inn. Boc-m. not slump, is the right tiiiic for TreaMjiy austmty. Similarly, l>oolll. not slump, is the right time for ](.(.■! authorities to curtail capital expenditure. ■'Finally, iinpoi ts >lioul<l be welcomed aud tariffs tenipoiaiily rcdmed if even if it means an adverse balance «i trade. Britain ha* now a plethora of gold. Therefore it is desiiablr that countries pro-duc-inj: raw materia;* should be allowed to replenish their stwks o! ?••'<! by soiling (roods to Biitain. tuns enabling then) to purchase British coorls at a later date when the home demand will be saturated.

'" The nioft urgent ta>k i= not. however, to combat a hypothetical boom. but_N» forestall tlic ±.t,:s\uz of ;i<ti\it> folloivinp tho rlri-linc <■: buil.Hns aitivity and tJie completion <•;" \'w leaiiiiaimiit )r>t we prcf'iiutale a cluni-i. Tlic time ie lipe tn ;i|.]...n,t a 11...11.1 nj vni-'ic invc#t-iiH-iits tr, rn.il.> ]..:_■•• .ui'l i:m-:iil pmjet-M to l, e Lniiuli.-.] at tin.- jitii.!<■!■! :.«nDie i.it of :titi'ii>t i;r»i \f rcrfuoed to s-K-li ;. H.-uio .1.- tin; pmjCCM ran afford. Tix- Bank of Kturland an.J tie Treasury have ample poivcii* f> ensure this low rate of interest. It would only be harmful an-1 liflblo ti r-aiino inflation if it were so low a.t to Mimulate more ne^ - projects thdn were able to absorb available resources."