EFFECT OF CHEAP MONEY.
To those unacquainted with the inwardness of the Money and Stock Matkets, it may, perhaps, appear rather strange that the rise in Government Stocks should he taking place at a moment when the National Accounts are in a thoroughly unsatisfactory position, when the economic position of the_country as a whole is such as to cause the gravest anxiety, and when we have Budgets showing large deficits, and when, moreover, the growth in Government Expenditure causes apprehensions with regard to the general outlook of the National Finances. Strangely enough, however, there is a sense in which up (Continued on page 838.)-
Finance—Public and Private
(Continued from page 836.) to a point the adverse conditions referred to have a directly stimulating effect upon British Funds and kindred stocks. Stagnation in ordinary commercial and financial activities means a reduced demand for money to finance those activities ; the reduced demand for money leaves these liquid resources available for investment and causes the rate of interest to fall, and with the banks giving only trifling interest on deposits, holders of such deposits are impelled towards the Stock Markets.
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