Devalue, float
Sir: In your very comprehensive review of our present economic situation (Devalue now, float later ', June 17), you say that it is generally agreed that sqeezes on the money supply as a solution to inflation increase unemployment. This would not be agreed by this group in the light of the country's present situation where we have excessive money supply and large scale unemployment at the same time. There is no direct causal connection.
Indeed, if there was a sufficiently large cut in government expenditure, say twenty per cent, not only would the money supply be sharply reduced but the check to inflation would make industrial investment once again attractive. No one is going to invest in an acute inflationary situation and it may well be that under present circumstances we would reach a point where large scale manufacturing would simply cease to be profitable. We are very close to this now.
Any further inflation of the economy on the existing industrial base points only towards economic tragedy.
G. K. Young Chairman, Economic Policy Group, The Monday Club, 51-53 Victoria Street, London SW1
Previous page
