SAVING AND LENDING

New Zealand Herald, Volume LXXIII, Issue 22578, 17 November 1936, Page 13

SAVING AND LENDING

Sir, —M hen Mr. Savage hoped that money saving would become unnecessary, he was obviously thinking of that, largest part of the community which never receives more money than it should spend to obtain the decencies of liie. Mr. Johnstone apparently agrees that it is not possible for the vary great majority of our people to save money. To be consistent, theretore, lie should welcome any monetary provision which will secure their decent existence in their old age or earlier incapacity to obtain money through wages, the "costs" which Mr. Johnstone claims must be "kept down" to enable "profits" to be accumulated by money-savers. Although an individual may grow financially rich by starving himself, the community itself cannot act on this principle. "There is general confusion," says Professor Irvine, "among economists as to what pecuniary 'savings' represent. Tho fact is that the real surplus (savings) is a power to produce more, and not an existing stock of goods." This surely is what our Prime Minister had in mind, that ho hoped the power to produce more wealth would not have to depend on saving of money which even Mr. Johnstone now admits "costs us nothing, nor do we save it—it is also of itself worth nothing." I quote from professor Irvine's "Midas Delusion" again: "Savings which result in additional productive plant require an increase of spending on consumption; otherwise this saving will be wasted. Increased spending is the only justification of saving." Mr. Johnstone's extraordinary claim that "our banking has provided us with sources of money far beyond our requirements" can be refuted by the undeniable fact that the banking system does not create money but only imperishable and unpayable debt by designedly keeping money in short supply to maintain the demand for "loans" of non-existent money. As Professor Soddv puts it, "the banker in one breath says, 'save your money, and come and borrow.' He cannot have it both ways." His advice to save is nothing more than his necessity to get under his control his own phantom money (fixed deposits) so that tho short-supply of his real money may not be exposed. His advice to borrow is given when he knows or should know that the community cannot provide the means of repayment. To-day tho world is in debt for moneys supposed to be saved but which never existed. W. J. Gatknby.