Value of money
Sir: Mr Kenneth Middleton (Letters,.28 January) has, I believe, focused attention on the central weakness in the Government's present approach to financial policy, when he asks 'Why not borrow all our savings all the time to pay for everything? Can someone please answer?'
The answer is, as Mr Middleton clearly well knows, that it can be done so long as people continue to retain their faith in the value of money as an investment. Once they lose this confidence, they will begin to spend and hoard goods in the certain knowledge that, whatever may be happening to the value of money now, in the long run it will cease to be able to buy anything and become quite worthless, as it did in Germany in the early 1920s.
As the consequences will be quite catastrophic unless action is taken at once, action will be taken and the action will he necessarily harder on profits than on wages, for the Budget will have to be balanced until people come to recognise the importance of stable prices as in all respects the equal of full employment.
W. B. Fairweather
8 West Grove Avenue, Dundee
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