Chapter XVIII Inflation And Featherbedding

professor is seeking to serve, international investors. Are you willing, Mr. Weiss, to disband our military forces? Are you ready to dry up the trickle that goes to all other agencies of the government, a bagatelle, three and a half billion? If we are going to jump on Uncle Sam for spending, what about the corporation spending, the Reserve Banks buying investment obligations, the hundreds of billions in loans made to persons, firms, corporations, municipalities, states, which is new money, inflation? What of the Reserve Open Market Committee, who may buy, any day, corporation stock running into many millions of dollars, and giving the corporation a cheque against no funds, which on being deposited in a commercial bank swells the volume of money, face of the cheque, and bank credits five times the cheque? On page 39, 1939 Reserve book, we find that "The aggregate deposits in the banking system as a whole (not just demand deposits but the aggregate, all deposits in all accounts) represent mainly funds lent by banks or paid by banks for securities, mortgages, and other forms of investment obligations. . . the proceeds go on deposit to be disbursed by cheque, and aggregate deposits are increased." During the last 25 years, Mr. Weiss, there must have been many trillions of dollars in loans, made, U.S. Bonds, notes, and other investment obligations bought by banks, and every time they made a loan or bought an investment obligation, they gave the seller deposit credits, which were new deposits, added to the volume at the time the loan was made. That's the nigger in the wood pile, dear readers. High prices, high wages, high taxes are not inflation. They are the result of money inflation. We have hundreds of billions too much money in circulation, on deposit, cached in many secret niches. Of course every time the Government issues bonds, the volume of money is increased that amount; but for every dollar in bonds of the United States there are many, many times more bank created new deposits on their books. It is true that Government bonds, to a small degree, create Reserve funds, as we have shown in our story; but every time the Reserve authorities buy corporation stock, buy anything, the reserves of banks