INFLATION METHODS

Evening Post, Volume CXV, Issue 31, 7 February 1933, Page 6

INFLATION METHODS

■ (To the Editor.) . - Sir,—lt has been ;clear for a long time that; the policy of deflation, so steadily pursued by. the Government, has been making things continually worse and worse. Now that it has reversed its policy, however, we are not likely to be any better off. It has introduced sudden and violent inflation in a manner that is calculated to secure all its disadvantages and none of its advantages. When it was decided to reduce the value of the New Zealand pound to sixteen shillings of English money, there was choice of several ways of doing it. The Government might, for instace, have issued Treasury

notes and declared them legal tender within the Dominion. The exact amount of inflation could have beeu secured by regulating the supply. The new money, could have T>een used to set all the unemployed to work at full wages on important public works. This would have cost_ nothing more than the printing, as no interest would have had to be -paid. The spending power thus given to the community would have revivified business of all kinds. Overseas payments would, of course, have increased just as they have now. That disadvantage is common to all forms of inflation. But external debts and all imports must be paid for in the end by exports. - The power to create new money, since it is founded inevitably on the real wealth of the country, should never be in private'hands. The country is threatened with disaster; if a central reserve bank is constituted in the manner proposed. It is easy to throw away the rights of the people. It may be extremely difficult to regain them.—l am, etc.. -.- , . ' OMEGA.