BORROWERS AND LENDERS qI

if the issue of bank currency is given a certain elasticity, so that demands for
capital may be met without unnecessary disturbance. This elasticity, however,
 must not be taken advantage of to meet, during prolonged periods,
demands for capital on a higher scale than the amount of savings effected
within the same period permits.

Finally, the author summarizes his thesis by exhorting central
banks so to regulate their discount rates that ‘demands for
capital must, by means of the rates of interest of the banks, be limited
lo the amounts of funds supplied by current saving, so that no artificral
 purchasing power, with its accompanying rise in prices, will
be created.”