The Key West citizen. [volume] (Key West, Fla.) 1879-current, 1933-05-04
MORE CREDIT In
MANY WAYS WITH
IMITATION MOVE
METHOD INCREASES FUR
CHASING POWER OF SOME
BUT REDUCES SAME IN
OTHER ACTIVITIES
BY J. n. BRACKET
tsss AHsoefmseaI Isrensl

Wy NNNUttHhrA a7NGNSt
NEW YORK, May 4.Infla-
tion ana definition accomplished
the same result if CARRIED through
70 the theoretical ultimate---the
destruction of values. Therein
hes the danger.
But seldom has either gone to
this extreme.
The courSe OF the depression
has illustrated deflation, as, in the
case OF the farmer who lost his
farm through foreclosure.
Frances initiation after the war
reduced the value of an individ-
uaPs bank account by 80 percent.
How The opposites Work
Defiation destroyes money,
while initiation creates it. Della
ton increases the purchasing pow
er Of those who have money, but
reduces the number of people who
have money; initiation lowers the
purchasing power of money but
gives it TO more people.
Complete deflation would turn
all credit into hard cash. Since
there is about 81, 250, 900, 900 of
gold in the country. this would
mean, If carried to the theoretical
extreme. that all Of the S35, 000,-
900 900 bank deposits and the bill
lions in securities would be re-
duced to gold, the basic money.
Initiation attempts to turn hard
cash into credit and credit into
more credit Carried to the the
oretical extreme, this would make
all money valueless because there
would be too much Of it.
Germany's initiation represents
such an extreme case; billions Of
marks literally became worth less
than the paper they were printed
on. IN 1929 America inflated
credit IN similar way. but not
to such an extreme. People who
had made paper fortunes on the
stock market tried To turn their
stocks into money only to find
there was not that much money.
Initiation No Stranger
Initiation is not new to Ameri-
ca. II nearly always comes with
great business prosperity in the
creation Of more credit. Such IN
flation Is not artifically induced,
but follows the willingness of
hanks and others to lend money.
a loan creates money. A deposit
IN the bank Of $1,000 may be lent
by the bank to another person.
who redeposits the 81 900, giving
the bank $4,000 of deposits. Such
imitation comes to an end when
the lender tries TO get cash, be-
cause Il has become impossible for
the borrower to make a profit on
the hugely inflated value Of his en-
terprisea Then deflation sets in.
The immediate dangers Of in-
flntion are that. first, wages and
salaries wisI not advance quickly
enough 70 increase the purchasing
power 81 sneh earners whose pur-
chaaes constitute the bulk Of
American business; and secondly,
that, carried very far. those per-
sons who have saved money viii
find their savings extremely def
eient IN purchasing power.
Other nations have been forced
into initiation because of short
age Of gold on for other reasons
beyond their control. The United
States has on the other hand, more
gold than any nation in the world.
lnflationists argue therefore that
even greater security exsist today
for the money than in 1929; that
imitation 70 1926 levels win not
be artificial or harmful in effect;
and. lastly, that il can be controll-
ed because II would be undertaken
consciously and with well consider
ed plans.