THE B MINUS A THEORY

New Zealand Herald, Volume LXX, Issue 21553, 26 July 1933, Page 13

THE B MINUS A THEORY

Sir, —I beg to put forward the above, which proves that so far from a cause of deflation the present credit finance system is a progressive inflation. Some Douglasites admit that all B payments were originally A payments, i.e., all costs were once distributed as purchasing power in some form. When, therefore, tho bank advances credit to the farmer, the tanner, etc., and this is distributed as purchasing power in tho course of his business (which provides 110 final product "on offer" "for consumption") there is a gap or time-lag where there is continually more purchasing power than goods on offer. To remedy this a board should be set Tip to withdraw a corresponding amount of credit on each transaction that does not immediately place as much value in goods "011 offer" for consumption as it distributes in purchasing power. Of course, there are a lot of people who think that when one set of transactions are releasing more purchasing power than they provide consumable goods, and others are doing the opposite, that these transactions neutralise one another so far as the ratio of goods to money is concerned, i.e., there is 110 inflation or deflation. But then —well, they have been educated on wrong lines, not having grasped the mighty truth of tho B-A theory by Sai.guod.