REHABILITATION COSTS

Bay of Plenty Beacon, Volume 8, Issue 58, 20 March 1945, Page 4

REHABILITATION COSTS

Sir ? —l was immensely interested in Mr Otto's letter, especially as the writer to he a practical ac-> countant and secretary. l } too, mSdestly <claim to be a practical accountant and secretary but unfortunately I have not been able to attain that happy plane of a commercial Nirvaa where credit is created indefinitely without the depressing reaction of inflation with all its attendant miseries. Perhaps my research into the profound mysteries of mercantile economics has not been carried far enough to enable me to apprehend clearly the difference between uncontrolled creation of credit by the State and the so called 'creation' of credit by tlie commercial banking institutions.

If unlimited creation of credit by the State to finance national undertakings does not result in inflation i * whereas similar manipulation by the trading banks does result in this unhappy state this revelation has too long been withheld from a 'Credulous host of business mer who have apparently been worshipping a false Mammon !

As a practical accountant I believe Mr Otto Avill agree that in orthodox accountancy there must be a debit ' whether in a national or personal for every credit. I aver this is so irrespective of whether the credit (or money) is 'Created' by the State or a mercantile bank.

I cannot accept Mr Otto's thesis that the State may with impunity 'create' unlimited money for national works. Inflationery tendencies are evident in most 'Countries today, but do not be deluded Mr Editor, into believing that a day of reckon-* ing will be averted. The State in all its omnipotence must like any solvent individual live within the income received from the sale of goods and services j and unlimited expansion of internal credit for any purpose whatsoever without a corresponding increase in national income produces demands s which if met, inevitably result in inflation. And inflation in any guis.e, I would sub-i mit ? is not a condition to be desired by any earnest student of coni temporary economics.

Tjie term 'costless money' or 'costless credit' surely implies- something for and usually not a great deal of discernment is required to find the axe belonging to the in-i dividual who is offering something for nothing. Yours etc., C. W. Go 6b y A.R.A.N.Z., A.A.I.S. } 'A.1.A.N.Z., A.A.C.A.' I