Marxism Unmasked from Delusion to Destruction.pdf 7471KB

How could people be so mistaken as to assume that there >»Tre no
consequences from this credit expansion? A special doctrine u-as de\'rk>ped
for this purpose. It was said that within the economic $\-stem there b a
natural Umit to credit expansion. The amount of moneN- required for
business transactions, they said, u-as determined b\' the "needs of busmcssT
and if the banks did not expand credit more than called for b\' these "needs
of business," then no harm can be done. Their idea u-as this: The producer
of raw materials sells raw materials to a manufacturer and issues a bill of
exchange to him; the businessnun who bu\-s the raw materials ukes the
bill of exchange to the bank; the bank discounts it and gnrs hun credit to
pay for these raw materials; after three months the manufacturer has
produced a finished pnxluct out of these raw nuteriak; he seUs the product
and pays back the loan granted to him Thertlbrr. the pnoponents of thn
system say. there is no danger if the bank mcTrK pomdes cirdii enabling
the businessman to buy these raw nuteriak If the bank limits itself to
granting credit to such business alrrad>- transacted, they u\, then the
amount of credit asked fmm the bank for such purposes ts hnmed by the
"needs of business"—b>' the exact and real amount of business transacted
in the couiitn,-. Therefore, it doc\nt mean in UK'rrasc m the supply of
credit, because the increase in the *upplv i»f crrdil corrrspondi e)UK^ to
the increase in the demand for credit transactions based on iral traitsactXNU
on the part of busine\%
But what this dtntrinc did mx \cc wa% that these "need* ot'businett**
depend on the amount ot credit gisrn bs the bank And the anHHini a{
credit It givcN t>ut depends on the interest rate it ask% hum bornn%m.Thc
higher the intcre\t rate, the fessrr b*»rnmers \mU want loans, the lawvr the
interest rate, the more b*»rnn\Trs will x\k lor crrdit
Even.- businewnun ^aU ulatet the cxpetted CHit|CO And iiKotnc of hs
projects. It hi\ calculations \h, of ii>iir>r. the nut of mtrmt. uill ihh pas. then the project i* not
undcrt.ikcn hut if the bank oj issue appears i^n the «iet>e and creates
additional circulation credit to gisr out for such purpowt. thrrrbs-
lowering the rate of interest beloss what it ^^\HiUi hasr been in the ab%eiKe
ot this new credit, esrn it onlv In a quarter ^^t a fifth of one perxent. a
number ot pn>|ccts whu h \st>uld not hasr been undertaken at the hifchcr
rate i>t interest would lunv be done I he imht expansKNi ol the bank
creates its tm n demand, it gisrs the iniprrssion that mofr %«vin|Ck. more
capital goods, are available than actuallv i* the caic in fact what hat been
increased is onlv the amount of credit