Asking everyone to reduce personal consumption by half can hardly be called a remedy for high prices. The same error is being repeated today in East Asia where credit is so tight that productive economic activities are being strangled, including the export oriented business that experts say will enable these countries to work their way out of the crisis. Monetary policy is an extremely crude and clumsy instrument. It does not distinguish between the speculator and the producer. It is a partial instrument that can be used to control money supply but cannot be used to effectively guide or direct the whole economic system.
Money is only a part of economy, which is itself only a part of society.
Exaggerated reliance on a partial instrument will destroy as much as it preserves. The focus must shift from the part to the whole. The problem arose because exuberant investors and bankers, both domestic and international, lost sight of the connection between money and productive investments. They caught the fever of high speculative profits and went after the fast buck. Investments were made, loans were justified because the value of the assets acquired was going up.