The Answer to Inflation.

Both Used and Proven 70 years Ago.


In the years 1944 and 1945 there was no inflation in Australia. During these war years inflation was measured with a “C Index Series”. In 1943, as reported by the Commonwealth Year Book No 37 (1947-47) published by the Australian Bureau of Statistics, the measure of prices was 1237. It fell to 1233 in 1944 and fell again to 1229 in 1945.

Spending on the war effort was at its height and could not be curtailed, and a large part of the population was not producing consumer products at all, so this put extreme pressure upon price levels.

Price controls were used during the first years of the war, but prices could not be controlled in this way. At the war’s beginning in September 1939 the measure of prices was 1,000 and by September 1943 it had risen to 1,237. In the next two years it fell to 1,229 in September 1945.

Australian’s Prime Minister in these years was John Curtin. He was familiar with C H Douglas’s suggestion to end inflation and applied it. This involved using some of the increase in the necessary money supply, to discount down prices to consumers. These discounts were applied to basic items such as potatoes and household electricity, and to reducing sales tax on clothing and textiles from 12½ % to 7½%. It worked, as the above figures demonstrate.

Although history has given us a proven method of stopping inflation it has never been used again. The current “control” on inflation is to increase interest rates which increase all costs and raise mortgage payments substantially.

John Curtin died in 1945 and this method of stopping inflation was discontinued. Two years later the measure of prices had risen from 1,229 to 1,301 and it has never stopped since.

All money increases are again done as debt and increase prices though interest and redemption charges upon these debts. Inflation is now “controlled” by increasing costs. This doesn’t end it of course, as we have noticed. What can this mean?

Inflation it seems, is now indisputably a deliberate policy. Is there any other answer?

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