DISCUSSION.

Anti-deflationary monetary policy, where it can be made effective, results in a large private investment and a low real rate of return, compared to a smaller volume of private investment and a higher real rate of return when deflation is checked by budgetary policy. If the antideflationary budgetary policy is carried out by increased expenditure there is more real government expenditure, either on current account or on investment account, while if it is carried out by decreased taxation the chief effect is increased Individual expenditure. Ideally, one would like to determine the volume of government expenditure, both on current account and on capital account, in accordance with an appraisal of the productivity of the public expenditures compared with that of expenditures in the private sector. One would also like to determine the degree to which government outlays are financed by taxes by a deliberate policy decision as to how much of a total capital heritage should be accumulated for future generations in the form of public assets in excess of the public debt. With budgetary policy thus determined, it would fall to monetary policy to handle the stabilization of the economy. Unfortunately, it appears that monetary controls alone will be insufficient unless our economy is subjected to some drastic overhauling in the direction of establishing a long-term rising trend of prices and high money interest rates as a permanent norm.