ABSTRACT
This chapter argues that a particular programme of borrowing initiated by the Treasury can induce a controlled inflation of income and expenditure. The Government has to pay the market rate upon long-term loans in order to acquire bank credit that it could raise at a far lower cost. Borrowing from the Bank of England increases disproportionately the balance of bank deposits owned by the public. More important place, the expansion of money income is surely essential in order to provide a sufficiently large flow of monetary savings. The money borrowed from these banks should be secured at very low, or nominal, rates of interest. Combined with restrictions upon consumption, the expansion of income will lead to a disproportionate growth in the flow of money savings. The necessity for an expansion of money income can be well illustrated from the figures for the last war.
