WELFARE LEAGUE AND INFLATION.

Waikato Times, Volume 114, Issue 19066, 3 October 1933, Page 7

WELFARE LEAGUE AND INFLATION.

portant, as the banks will Issue aa many notes as we havo claim to.

I have been arguing inflation in theory, hut in practice it should be j brought about, not by increasing the note Issue, but by paying for produce at fixed prices in our currency, regardless of the prices received on overseas markets. The prices should be based on costs. Then our currency value on the exchange would simply vary according to the price on the markets in England. At present the prices vary so that the lower the prices the higher the value of our £ (whether recognised or not), and the higher the value of fixed interest payments and repayments of loans. Now that prices are very low there is reason for inflation—if they went very high then there should be deflation; but if our currency were stabilised to a pound of butter, oniy the prices of our imports would vary, and we would buy from outside only what we could afford.

(To the Editor.) Sir, —The New Zealand Welfare League’s last letter wanders a little from the direct discussion of inflation and concedes that prices do not necessarily increase to the full extent of an increase of currency. I admit that inflation can he brought about in many ways, but not by loans, as suggested. Loans make a debt to balance them; but high prices for produce are inflation, and therefore our debts • are based on inflated capital. Low prices mean deflation, and this means wo arc paying our debts with deflated currency (if we pay them). Thus if a farmer borrowed money when lnillerfat was Is Sd a pound and paid it back when his bullerfat brought in only lOd ho was in fact, paying back double what he borrowed. The real value of our currency depends entirely on our income from exported goods, internal currency issues being quite unim-

Control would, of course, be automatic and not subject to Government interference, probably being controlled by the banks, and the only adjustment it. would require would be it’ new methods made it possible to produce any article more cheaply, r An occasional review of costs would suffice for this purpose. Then wages, interest and profits could be made to find their correct levels and workers would once more feel secure. provided work was rationed and Hie unemployed were given their places again in the work of production.—l am, etc., EQUITY. Tlrau, September 30. 1933.