Salient. Official Newspaper of the Victoria University Students' Association. Vol 41 No. 21. August 28 1978
The Socred Proposal
The Socred Proposal
As the monetary base has contracted (so the Social Credit argument runs) the velocity of circulation has increased, largely as a result of the operations of financiers who cream off a huge profit in the process. Since the monetary base of the economy is shrinking, so money is becoming relatively scarce, interest rates are rising and the fires of inflation are being consequently stoked.
'Under modern conditions, a further reduction in the monetary base makes inflation worse. Such a policy brings financiers still higher unearned profits through interest, and also increases their power over industry and their grip on the economy.' (NZSC Pamphlet, Cause and Cure, 1977).
The solution to these problems is to expand the monetary base of the economy while decreasing the velocity of circulation of money. The operations of the finance houses will be phased out and the job of providing loan finance given wholly to the trading banks who will be allowed to make a service service charge only for their services. The elimination of financial exploitations and an increase in the money supply are the twin Social Credit keys to the elimination of inflation.