A Hat Trick of Failure: Production, Prices and the printing press
A week ago today the Denis HealeyChancellor of the Exchequer spoke to the House of Commons about the economic situation. His story was simple: the economy on target; production growing; inflation mastered, and the difficulty of controlling the money supply dealt with by temporarily putting up Lending Rate to a record 15%;.
Conservative M.P.s could hardly believe their ears; that the British Chancellor of the Exchequer could treat such a serious crisis in such a casual manner. Indeed, the remaining confidence of his own colleagues must have been shattered by the news we have had in the seven days since then. [end p1]
First, production. One day after the debate, figures from the Government's own Statistical Office showed that production is not growing as the Chancellor had indicated, but that it has probably been falling all this year.
Second, prices. Four days after the debate, the official figures for prices came out. They showed that for the second successive month prices are rising faster. After 2½ years of Labour Government the annual increase in price is still higher than when the Conservatives left office in February 1974.
As we have warned for some time, there is no hope of inflation falling below 10%; this year. Worse than that, the possibility of getting down to the rate of inflation achieved in Germany and America by sound policies has almost disappeared. [end p2]
Third, Printing Money. Seven days after the debate, that is today, we have learned that the increase in the amount of money in the economy (money not backed by increased production) has gone up by leaps and bounds. In other words the money printing press is rolling. Today, we can see that it got going just when Mr. Healey promised he would keep to a target figure. Since then it has grown at over twice that target rate.
What a hat trick of failures!—Production falling, prices rising and printing money! Now we know why the Government was so anxious to have the economic debate on the first day Parliament came back—to avoid having to explain the figures published since then. How ridiculous and futile it is that the Chancellor goes on trying to conceal the truth from the country.
What we now face is not the crisis of capitalism but the catastrophe of Socialism. Britain can't afford to go on like this much longer.