OH. 19

ASPECTS OF THE CREDIT CYCLE

299

But it also—and in this respect it resembles IncomeInflation—causes a redistribution of existing wealth bytransferring wealth from owners of money and debts tothose who have borrowed and have liabilities expressedin terms of money. For not only do those in the pos-session of money-incomes find that their real incomesare diminished; those who are in possession of a stockof money also discover that this stock has less than itsprevious real value. Mr. Robertson has argued fromthis that the latter class may, therefore, be inducedto save on a greater scale than they would otherwise,in order to make good the loss which they have in-voluntarily suffered in the value of their stock ofmoney. In addition those in receipt of increasedincomes, whether as a result of increased employmentor of higher money-rate of efficiency earnings, may beexpected to save part of their incomes to build uptheir income-deposits.

To savings arising in the former way, i.e. to re-plenish income-deposits, Mr. Robertson has given thename of “ induced lacking ”, as distinct from the“ imposed lacking ” (as he calls it) resulting from thereduction in the purchasing power of current moneyincomes which is caused by Commodity Inflation.

But there is something further to be said about thedistinction between these two things. Mr. Robert-son’s “imposed lacking” is solely a characteristic ofCommodity Inflation and is not present in the caseof an Income Inflation; whereas his “ inducedlacking ” is primarily a characteristic of an IncomeInflation, and is only present in the case of Com-modity Inflation when the latter is accompanied byan increase of output. For there is no reason toexpect any increase in the Income Deposits exceptin proportion to the increase of money-earnings.Furthermore, whilst “ imposed lacking ” necessarilyrepresents an augmentation of the resources availablefor new investment, this is only true of “ induced