Dear Sir

Bay of Plenty Beacon, Volume 9, Issue 48, 1 March 1946, Page 8

Dear Sir

Letters to the Editor must be clearly written on one side of the paper only and where a nom-de-plume is used the name of the writer must 15e included for reference purposes. The Editor reserves the right to amend or withhold any letter or letters.

WAR BONDS RACKET Sir —Re the above the Congress- * man did not overlook the fact that the Trading Bank lias lent the Gov-, ernment the million dollars, the trading bank having given its note of hand to the Reserve Bank as a deposit, which now represents cash. Now let us see wliat the Government is giving for that cash. Financial credit derived particularly from the air. The Government is guaran-

teeing the peoples credit, real credit, ‘production and resources’, as against those bits of paper,, pen and ink; to paid for at some future date “or never” as the case may be; as our production cannot keep pace with the debt in simple and com r pound interest. Whilst the money is being spent there is inflation and the money retiring is less than tlie money borrowed after deducting taxation (interest); therefore it is obvious that the debt must increase and multiply. Further the results of the Savings Banks and State transactions under present conditions is above normal when you consider that there has been no purchasing power during the Avar through shortage of goods; and taking the value of the pound today it won’t go far when the goods come on the market again. I take it for granted that the trading bank does not

grant an overdraft to the Government it is a loan on bonds or in * other words a mortgage on the peoples credit; the banks or trading institutions having eventually subscribed or acquired 75 per cent, of the bonds or more the remainder J being liquidated in interest, this is a ‘corner’ in credits. Mr Wilson says: ‘The creation of new money originates in t'ic operations between the State and the Reserve Bank. and the State is the sole creator of new money. (Hypothetical. my note.) also that the Government has power to expand or contract credit at will. Well this is interesting. Why can’t we get free money for

public works? Treasury Bills for instance? But this would not be “Sound Finance.” It was Lord Sydenham who said: “It is easy for us to borrow money. If. the modern credit system is a trap, we have walked right into it.” This was in 1921 and he knew! Montague Norman, had just taken charge of that private institution ‘the Bank- of England.’ Tours etc. W. BRADSHAW.