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A TREATISE ON MONEY

BK. IV

Inflation over the increment of accumulated wealthrepresented by voluntary savings, Mr. Robertson calls“ imposed lacking ”, and he contends that there areoccasions when it is desirable that the rate of incrementof accumulated wealth should be greater than couldbe the case under a regime of voluntary saving un-supplemented by “ imposed lacking

It should be noticed that the Commodity Inflationphase of a Credit Cycle cannot be of use for con-tinuously raising the rate of wealth-accumulation. Itis only useful for the purpose of producing a short,sudden spurt. Now it is quite conceivable that occa-sions may arise when a spurt of this character maybe acutely needed. Commodity Inflation may be themost effective means of rapid transition in any casein which we have good reasons to be in a hurry.But I find it difficult to think of good examples,—except, of course, War, when the financial purist mayfind himself overwhelmed before his own more slow-moving devices have had time to produce their effect.

We must, therefore, set on the other side the lossesto wealth-accumulation due to the Deflation phase ofthe Credit Cycle. And is it certain, when this hasbeen done, on which side the balance lies ? It mayvery likely be the case that during the nineteenthcentury the greatly increased wealth of the worldwas predominantly accumulated by Co mm odity In-flation ; but this may have been due to the increasingabundance of money and at the same time the in-creasing efficiency of the factors of production whichallowed a prolonged moderate excess of prices overefficiency-earnings, so that profits emerged and wealthwas built up, rather than to the sharp oscillations ofthe Credit Cycle which were superimposed on thisgeneral trend. For there are enormous losses to beput on the other side ascribable to the cyclicalDeflations. The loss during the latter arises not onlyout of consumption at the expense of savings but also