NOTE INFLATION.

Taranaki Daily News, 6 November 1922, Page 4

NOTE INFLATION.

The subject of note inflation was reviewed a month ago by the National City Bank of New York, one of the greatest of American 'banks. It directs attention to one fact that stands out in all countries that have indulged in paper money inflation, namely, that it is impossible to relieve monetary stringency by printing paper money. In every period of monetary stringency there arises a demand that the Government or the banks should issue more notes for the purpose of giving relief. The burden of the outcry against the United States Federal Reserve Banks in 1920 was that they refused to extend their powers to make loans and issue currency. The National City Bank adds that it always looks as if it would be easy to relieve a condition of financial stress by issuing notes. People think that inability to borrow or to sell at satisfactory prices must be due to scarcity of money, never that borrowing mav be overdone or that prices may be too high or that there may be too much money.