credit

Secondly Social Credit's proposed issue of interest free or even debt free money could only be done by the government or some State Controlled institution. The private lender will only lend money if he is to get a return in the form of interest on his loan. He won't lend money to the government if no interest is payable. And interest free or debt free money must be inflationary. With no necessity to repay, more money is effectively put into people's hands. If, as seems likely, total credit available increased, without being accompanied by a corresponding increase in production, the pressure on our overseas funds would approach breaking point and heavy import controls, which the recent survey by the World Bank indicated were not in New Zealand's best interest. would have to be imposed.

Thirdly Social Credit's policy of making increasing use of Reserve Bank credit at cost of issue for government and local body capital works raises the question of whether all government and local body works would be given interest free loans or only some. If only some, how would priorities be worked out? Presumably the government would decide. but imagine the arguments and accusations of discrimination which would break out with each local body and government work wanting free money. No one would want to do anything privately where it could use state facilities at a far lower cost. The private sector would find it was unable to compete and government could end up by having to accept responsibility for the whole of this sector, amounting to about three hundred million dollars a year.