OH. 20 PURE THEORY OF THE CREDIT CYCLE 319

instead of^l + as * n the Standard Case;

and finally in the (2 r - l)th week

x

m 1 + (r - l)(2r - 1 - 2m)

t{2r-l)y

If, intermediately, we assume that the old entre-preneurs in receipt of windfalls retain part of theirwindfalls but not all, then the rise of prices lies be-tween the results of the two formulae compared above.Thus the increase of bank-credit and consequently ofretail prices in the successive time-intervals must begreater than in the Standard Case—how much greaterdepending on how much of the windfalls is con-sumed by those receiving them; but the argumentis not otherwise affected. The enforced diminutionin the consumption of existing consumers must nowbe sufficient to equal the new consumption of theprofiteers as well as the consumption of the new pro-ducers, and the fall in the real value of money-incomesmust be proportionately greater. For this reason theabsorption into production of 10 per cent unemploy-ment is capable of requiring a much greater increasein the price-level than the 11 per cent which wasthe maximum required in the Standard Case. For ex-ample, if x is 10 per cent, t is 90 per cent, to is 1 and2r is 50, prices rise in the Standard Case from 100 to11 O’6, and in the case where entrepreneurs consumetheir windfall, from 100 to 350. The result is thesame if consumers try to do what it is impossible forthem to accomplish as a body, namely, to maintaintheir former rate of consumption per unit of outputby drawing on their savings.

On the other hand, there is a way—apart from theincrease of the Income Deposits—in which the pheno-mena of the Credit Cycle may stimulate increasedsaving which would not have occurred spontaneously.Since the value of money is falling during the upward