SPIRAL OF INFLATION

Gisborne Herald, Volume LXXVI, Issue 22877, 22 February 1949, Page 6

SPIRAL OF INFLATION

Sir,—“Rustic” fails to discriminate between international, national and domestic financial problems and procecces. National politics act as the buffer between two extremes, expanding and contracting, and are just as inert as an old rubber tyre. So much for . politics and inferential bulletins— There is no evidence put forward, even by the Opposition, that the present Government is issuing or using money carelessly, Control itself proves the suggestion ridiculous. It is not the circulation of money which exasperates the interested critic, but its control. That control is designed and is successful in defeating inflation. “Rustic" can be assured thai his so called “spending spree” is being indulged in with great humanitarian benefit and safety. The danger of inflation, or rather deflation, lurks in a possible fall in the market price of our exports, as the real estate, or fixed wealth, of the people is- always held as collateral security. Even here the Government is reviled for its safeguards. But is must be conceded that the wealth of a nation does not rest in what it can sell, but in what it can keep. Contrary to common belief, the Reserve Bank is not the toy or milch-cow of the Government. It is a gold bank and parentally presided over by the Bank of England, and the shareholding of each has nothing to do with the policy of either. It is true that hundreds of millions are available, and this unfortunately prevails throughout the world—if we can use it. The world’s conundrum is: How can this be done? We must use it, as the world is responsible for it. We cannot stretch natural consumption, but we can stretch money, unit by unit, until book balance is effected between more intense capitalisation and the convertibility of a higher price level; wages must correspond. There is no official complex in New Zealand. Wages must move up to price level and the price level must rise to absorb the capital cost of war destruction. JAS. MORRISON