Combating inflation
Sir: When I read the first paragraph of Mr Ridley's article, I thought to myself, thought I, "Thank Heavens! Here, at last, is somebody who really understands about inflation." Of course wages and prices are only the symptoms, and you'll never cure it by attacking one or the other or both, voluntarily or by legislation. Can we put this thing in a nutshell? Inflation and deflation are variations in the ratio between the goods and services being exchanged at any given 'moment — and the amount of money in circulation to pay for them.
How to vary that ratio? Doctor Shacht used the printing press, and then issued a new currency to replace the old. The French did the same, with their old francs and new francs. This is the direct method. Even Mr Ridley, it seems to me, wants to demolish the symptoms, the Channel Tunnel, the number of civil servants, government borrowing abroad, and so on. His scheme would work if it could be
worked; to my mind there are too many people involved. The amount of confrontation necessary is alarming, together with the violent alteration in peoples' lives. What we need is legerdemain, a flick of the wrist that is almost unnoticeable.
What has to be done is to control the value of the currency, and the way to do this is to set up a gold standard, not the old permanently pegged gold standard, not even a floating gold standard, but a deliberately variable' gold standard. Then the slightest touch cn the official price of gold would send. the value of the currency up or down, al. will. And, what's more, practically nobody would notice.
Anthony Gibbs Spurfold House, Peaslake, Surrey.
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