Page 14 - Michael 2024 January

For an effective fight against inflation

by Louis Even credit, giving as their reason for doing so that they
Where do we find this enemy? are combatting inflation. Restriction of credit exer-
cised against the production side of our economy
Everyone today is complaining of inflation, and has for its effect to diminish production; but it has no
with good reason. Governments, citizens, producers effect on prices: Quite the contrary, in fact, it is when
and consumers, all are in accord on this one fact, products are scarce that prices tend to increase.
that inflation is the major ail- Restriction of credit is always
ment of our existing economy. accompanied by an increase in the
It chokes off the flow of goods rates of interest charged to those
on the domestic market; it pla- who would borrow, or who suc-
cés exporters at a disadvantage ceed in,obtaining loans. Now, ob-
with regards to competitors viously, an increase in interest rates
who can offer their products at certainly isn’t going to help prices
a reduced price; it reduces the take a downward trend. Again, the
amount of goods a family can contrary is true; producers must,
buy because of ever-mount- of necessity, include in their prices
ing prices, it is a cause of un- all their financial charges, and this
employment because of prod- will include the increased rate of
ucts which will not sell.”... interest which they are obliged to
So it is obvious that some pay: Higher interest rates make for
sort of a fight must be put up higher prices.
against inflation. Very good! Louis Even at his desk in 1964 The high-browed savants sit-
But then where do we find the ting in their ivory towers in the
enemy and how do we recognize him? The word universities or on the councils of the financiers rec-
inflation means a swelling up, a puffing out. So it ommend the increase of taxes as a means of fight-
shouldn’t be hard to recognize since by its definition ing inflation. And what will an increase in taxation
it is a swelling, a distension. achieve? The taxes paid by producers are included
Just where is this: swelling this distension? In in the prices they charge the consumers. Increase
the pocket book or in prices? taxes and you are bound to increase prices. Again
I hardly think we shall find anyone complaining this is only too painfully clear to anyone who is not
about having too much money in his pocket or befuddled by all the technical jargon which these
in his account at the bank. But get anyone to talk savants employ in order to mask the true effect that
about prices and you will soon find out just where their plans and schemes will have. As for the taxes
this swelling, this distension is occuring: the unions which are paid by the consuming public, these sim-
especially have based their case for demanding in- ply reduce still more the contents of the consumer’s
creased wages mainly on the inflation of prices. So purse. They have no effect on the prices, where the
most everyone has a pretty fair idea of where this real inflation exists.
inflation is taking place. The compensated reduction of prices
Let’s have that established once and for all: our
Now, since inflation is to be found in prices, it
worst economic enemy, inflation, is in prices and is prices which must be treated. There the remedy
not in our pocketbooks. must be applied, and not elsewhere.
But now we find a very strange situation has
Does this mean that prices must be frozen, fixed
arisen. All the great savants, all the big names in the by government decree? By no means: prices pertain
spheres of economics and politics are unanimous in to producers, to the middlemen, to the merchants.
declaring that the one way in which to banish infla-
tion is to deflate our pocketbooks! Our poor wallets, So much for that. Now, what about getting prices
which are already pitifully thin, must be diminished down? How can this be done without hurting finan-
even more, while prices, which are swelling and cially those who have a right to regain what they
swelling at an increasing speed, aren’t even brought have spent in costs, along with a just and legitimate
into the picture. profit?
The banks, joining in this grand concert—in fact, Clifford Hugh Douglas, the Scotsman who found-
they are conducting it—practice thé réstriction of ed the Social Credit school, studied this question
deeply and came up with a very concrete and logic-

14 MICHAEL January/February 2024 www.michaeljournal.org