ECONOMIC MALADJUSTMENT

Otago Daily Times, Issue 25503, 5 April 1944, Page 6

ECONOMIC MALADJUSTMENT

Sir,—Everv pound taken out of circulation by means of taxation, long-term saving, including capital saving, voluntary giving. Interest payments, etc., remains in the price of whatever it helped to produce, and so creates a monetary vacuum that has to be filled by an inflow of new money destined to become a communal liability. The effect is felt in a gradual increase in production costs followed, in course of time, by a rise in commodity prices. It is obvious, therefore, that any long-term price stabilisation is impossible and can only be attempted temporarily by the use of a multitude of movable price-ceilings, each adjusted to leave a margin of profit to the merchants generous enough 'to enable them to absorb the increasing costs for some time ahead. Under such conditions as these no compulsion, short of Hitlerism could make a stabilised wage-floor strong enough to resist the combined upward pressure of the dissatisfied wage-earners, and the authorities have been compelled to give increases to particular sections of workers, and to resort generally to the artificial device of relieving the tension on overstretched purses—until the profiteer? catch up—by rationing our abundance. But in spite thereof, this economic maladjustment will continue to grow worse because of the basic fact that no suen contrivance of checks and counter-checks designed to achieve economic balance can prevent the communal indebtedness from creeping steadily upwards with costs and prices in tow. This economic balance can be achieved only by. filling the monetary vacuum with the required amount of new money without adding to the common debt—and by keeping it filled.—l am, etc., S.