Shaw's policy backfired
THE EDITOR, Sir:
Peter Phillips has been subjected to much criticism by the opposition spokesman on finance. However, the critique is empty rhetoric.
Audley Shaw, in his capacity as finance minister, was an advocate of low interest rates. He badgered the banks and other financial institutions to make borrowing money cheap for the consumer.
He was persistent in his quest for easy credit - a strategy to increase the supply of money. However, the economic boom and an appearance of prosperity created by easy money are artificial and will eventually collapse.
Presumably, Shaw's goal of lowering interest rates was a measure by his Government to inject new money to repair an economy that was bleeding from bad policymaking.
Lowering interest rates as a measure by government, and injecting new money to repair an economy that is haemorrhaging from bad policy will not sustain itself for long. The outcome of such a measure will inevitably lead to inflation and what Edward Seaga once referred to as economic stagflation.
GLEN GEORGE WILSON
Springfield, St Elizabeth