ECONOMIC DEFLATION

Hokitika Guardian, 16 June 1932, Page 6

ECONOMIC DEFLATION

DR. BEL,SHAW’S VIEWS

AUCKLAND, June 16

Declaring that the process of economic deflation in New Zealand is «tid far from complete, and that as a policy it is frought with extreme danger, Dr. Belsliaw in addressing the Economic Society urged that the exi change rate should be raised to not j less than 30 per cent.,, and be niaiiij tained at that level, until overseas ' prices 'became more stable,^ In emphasising the still existed between export prieef and internal prices, Dr. Belshaw said that on the basis of 1928 the continuance of deflation would require further reductions in the- award wages, of say 30 per cent., and in interest and rent of say 20 per cent. Nevertheless, the burden of fixed charges and taxes j would still remain unduly heavy and , the continued Sail in internal prices J would result in a persistence of 'low i profits or no profits, and heavy unemployment. 1 Further, the Governments adjustable expenditure would require to be reduced from fourteen millions to four .millions. Clearly the Government were faced with an impossibe tack in balancing the budget at such a level of national income. It would he unwise to expect relief from a rise in export ' prices. He added that he expected the exchange rate to go up when the pool was abolished and suggested that an Exchange Control Board he set up, as a preliminary to establishing a Central Bank. 4 ,