Financial world has moved on

Jill Stevenson (Letters, 1 February, ‘No Magic Money Tree’) suggests that it was money from the USA under the Marshall Plan that enabled the UK to rebuild its economy after WW2, rather than the decision taken by the Attlee Government advised by JM Keynes.

While it is true that the mixture of low interest loans and grants accelerated economic recovery in Europe, it is by no means certain that they were necessary and that, without them, Europe would have taken a very long time to recover from the devastating effects of World War.

Overall, the loans and grants amounted to a mere 3 per cent of GDP of the European countries involved.

The Truman Administration did not donate funds to Europe out of altruism. The USA had suffered much less war damage than Europe, so they were not trying to rebuild their country. But they were afraid that Europe would turn to Communism and decided to give aid to prevent this from happening.

There were strings. Some of the funding was in the form of goods and services that then had to be paid for in $, so manufacturers in the US were the real beneficiaries.

However, the existence of the Marshall Plan does not invalidate the Keynesian principle of state investment in services and infrastructure being key to stimulating growth.

And Ms Gunn Barrett is correct in her assertion that a state with its own currency and central bank can create the "money" needed to fund government spending without causing inflation, provided the money supply and the quantity of available goods and services are kept in balance.

The financial world has undergone a quantum shift since the US Government abandoned the Gold Standard nearly 50 years ago.

Julian Smith, Limekilns

Labour and the UK government have failed to call for the urgent reinstatement of UNRWA aid