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Salient: Victoria University Students' Paper. Vol. 24, No. 13. 1961.

The Necessity of Anti-Inflationary Measures

The Necessity of Anti-Inflationary Measures

Those who have breathed a sigh 'of relief at Mr Lake's leniency in not taking corrective action are short-sighted, in the same manner as a cancer patient who delays the necessary operation. For just as delaying the operation only means that it will be more harrowing in the end, so delay in correcting excess demand will lead in the end to the corrective action having to be. more severe and more likely to disturb production and create unemployment. When excess demand first develops, its removal can be virtually painless, because the maladjustments within the economy will be small and easily corrected by a few measures aimed principally at the amount of credit being granted by banks and other institutions. But once it has been in existence for some time fundamental changes come about as more workers tend to be employed in firms which depend on the state of excess demand for their high level of activity. If this has gone on long enough, it then becomes a much more painful task to restore normality because a larger part of industry will find that it has become over-expanded during the boom. For this reason it is time the New Zealand electorate recognised that early anti-inflationary measures are not the actions or spoil-sports, but are I m fact necessary if real hardship is not to be inflicted at a later date.