SOCIAL CREDIT AND INFLATION

Otago Daily Times, Issue 22504, 23 February 1935, Page 11

SOCIAL CREDIT AND INFLATION

ro THE EIUTOE Sib, — 1 smiled as I road the latest com tribution of “ Inquiries',” as 1 sensed, even through the cold print, hia glee at having, in his own opiinion, proved me wrong. But “he tvho laughs last," etc., and I must once more urge upon “ Inquirer's” attention some remarks which I have, time and time again tried to make him consider. In former letters I stated that if critics ffiad a good knowledge of the present eyaitem and of its working they would not be able to imagine difficulties under social credit which do not even exist under the present very defective system. I stated that money is not cancelled by beinc; repaid to the bank, but that one’s personal indebtedness was so abolished. V I pointed out that money is cancelled or withdrawn from circulation when, through ordinary trade channels, it goes into the bank. It your correspondent had not let his eagerness to corner me blind him to obvious facts and inclined him to treat my statements with scant notice* he would not have fallen into his own blunder, which be now parades as my error. When I stated that the way monqy was cancelled was when it reached the bank through trade channels I stated a fact that had “Inquirer” taken notice explained the whole transaction along "which he is so curious. The only difference between the free gift of the national dividend and the loans of the present 'banking practice is that, as “ Inquirer ” says, one has to be repaid, with interest, and one has not. But if your correspondent only realised that this repayment to a hank is only the abolition of the debt contracted, and is not the actual taking of that money from circulation, he may see light even yet. The actual loan to the individual has been expended through trade channels in buying Taw materials, machinery, buildings, and wages. It has long since found its way back to the banks, and has been retired from circulation in that way. That money cannot be put into circulation again except by being reissued as a loan, " debt,” in respect to fresh production.; or, if it is savings, reinvested. It will still be a fresh “ cost,” and caxmot be considered as used in purchase off the original articles. Under social credit the national dividend money would not iwed to be repaid to a bank, and there would not need to be a personal “debt” to liquidate. But it would then, a e now, reach the bank through the usual channels, and be withdrawn from circulation in that way. So it remains true that the national dividend money would be cancelled as it is to-day in regard to an overdraft or loan. ' The only difference—and a vital one, I admit—is that there would not be any personal indebtedness to be repaid. In assuming that the actual repayment of a loan to a bank cancels the money • which comprised the original amount, “ Inquirer ” is just a little bit behind time, since that loam money has undoubtedly been retired long before when it reached the bank tihrou"h trade avenues. When he learns tlhe difference between repayment of personaj debt and the retirement of money he will perhaps understand that hie difficulties in the matter are all of his own making.- I am. etc., E. W. F. February 20.