CREDIT INFLATION

Hokitika Guardian, 4 May 1934, Page 5

CREDIT INFLATION

BANKERS-’ WARNING

VAST AMOUNT OF IDLE CASH.

(United Press Association—By Electrio

Telegraph—Copyrights

WASHINGTON, May 2,

,The Federal Reserve Board issues a warning that the huge expenditure under President ‘Roosevelts’ “new deal” and his monetary policy are driving the country toward an orgy of credit inflation.

The board states that £300,000,000 of idle cash is piled up in the banks by the outpouring of Federal eas.vmoney and the devaluation of the dollar.

The country should be forearmed against a devastating w a vc of inflation when these huge stores -of. idle cash and credit rush back into business and speculative channels.

As an antidote the board urges Congress to revise the banking reserve requirements so that they m-ay increase 1 automatically with speculative activity, thus putting the brake on any spurious boom. ■FLOW OF GOLD TO U.S.A. 'CEASES A VERY DELICATE 'SITUATION. WASHINGTON, May'2. Now that the flow of gold into the United States has ceased, there is every prospect of it going abroad again this week in order to bolster up the dollar. Already the dollar is selling at such a discount in Paris that international bankers find it profitable to buy gold in New York and ship is oversees, The Secretary of the Treasury, Mr Henry Morgenthau, believes the French, with the idea of draining gob! from America for their own Treasury' have been spreading reports that Pres! dent Roosevelt will .further devalue the dollar soon.

At the moment, the Washington Administration is in a -position that re quire s delicate political diplomacy.