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Federal Reserve Bank of St. Louis
Collection: Paul A. Volcker Papers
Call Number: MC279
Box 3
Preferred Citation: Chronological Correspondence: October 22-30, 1981; Paul A. Volcker Papers,
Box 3; Public Policy Papers, Department of Rare Books and Special Collections, Princeton
University Library
Find it online: http://fmdingaids.princeton.edu/collections/MC279/c40 and
https://fraser.sdouisfed.org/archival/5297
The digitization ofthis collection was made possible by the Federal Reserve Bank of
St. Louis.
From the collections of the Seeley G. Mudd Manuscript Library, Princeton, NJ
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Federal Reserve Bank of St. Louis
October 30, 1981
The Honorable Jake Garn
United States Senate
Washington, D.C. 20510
Dear Senator Cam:
aB/TEA/RS:wja
My colleagues and I on the Board of Governors want to thank you
for agreeing to speak at the evening session of our Conference of Chairmen
and Deputy Chairmen of the Federal Reserve Banks on Thursday, December 3
at the Watergate Hotel. We will begin with cocktails at approximately
6:00 p.m., but dinner doesn't start until 7:00, and I think it would be
fine if you could arrive any time during the reception. We also understand
that during that particular evening, you may be required to vote on the
Senate floor. To handle that contingency, we will arrange to have one of
our cars and a driver at your disposal for the evening.
As you are aware, each Federal Reserve Bank and branch has a
board of directors comprising a wide occupational diversification including
banking, manufacturing, education, agriculture, and the service industries.
The Chairmen and Deputy Chairmen of the Banks play a particularly important
leadership role in the System as well as in their own communities and industries. I have enclosed a current list of the Conference's participants -all of whom I expect will attend -- for your information.
=
m
s_
c
Lf vs 0 0
E
s_ r•-••
C.)
For the December meeting, we traditionally invite several additional directors who will be designated as Chairmen or Deputy Chairmen for
the next year as well a few of the senior Board staff, so there will be
about forty individuals in attendance. I am sure that they would be interested in any topic or issue that you would wish to discuss from your
vantage point as Chairman of the Banking Committee. The program will be
informal, totally off the record, with no media representation.
I greatly appreciate your planning to join us.
0
•
Sincerely,
• •
0 s_ s_ s_
ALW
•-•
Enclosure
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Federal Reserve Bank of St. Louis
P. 1
CHAIRMEN AND DEPUTY CHAIRMEN OF THE FEDERAL RESERVE BANKS
1981
Bank
Chairmen
Deputy Chairmen
Boston
Mr. Robert P. Henderson
Chairman and
Chief Executive Officer
Itek Corporation
10 Maguire Road
Lexington, Massachusetts 02173
Mr. Thomas I. Atkins
General Counsel
National Association for the
Advancement of Colored People
1790 Broadway
New York, New York 10019
New York
Robert H. Knight, Esq.
Partner
Shearman and Sterling, Attorneys
53 Wall Street
New York, New York 10005
Dr. Boris Yavitz
Dean
Graduate School of Business
101 Jris Hall
Columbia University
New York, New York 10027
Philadelphia
Mr. John W. Eckman
Chairman and
Chief Executive Officer
Rorer Group Inc.
500 Virginia Drive
Fort Washington, Pennsylvania
Dr. Jean A. Crockett
Chairman
Professor of Finance
Department of Finance
Wharton School
University of Pennsylvania
Philadelphia, Pennsylvania
19034
19104
Cleveland
Mr. J. L. Jackson
Executive Vice President and
President - Coal Unit
Diamond Shamrock Corporation
1200 First Security Plaza
Lexington, Kentucky 40507
Mr. William H. Knoell
President and
Chief Executive Officer
Cyclops Corporation
650 Washington Road
Pittsburgh, Pennsylvania 15228
Richmond
Mr. Maceo A. Sloan
Executive Vice President and
Chief Operating Officer
North Carolina Mutual Life
Insurance Company
Mutual Plaza
Durham, North Carolina 27701
Dr. Steven Muller
President
The Johns Hopkins University
Charles and 34th Streets
Baltimore, Maryland 21218
Atlanta
Mr. William A. Fickling, Jr.
Chairman and Chief Executive
Charter Medical Corporation
P.O. Box 209
Macon, Georgia 31202
Mr. John H. Weitnauer, Jr.
Chairman and
Chief Executive Officer
Richway
P.O. Box 50359
Atlanta, Georgia 30302
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
P. 2
•
CHAIRMEN AND DEPUTY CHAI.MEN OF THE FEDERAL RESERVE BANKS
1981
Bank
Chicago
St. Louis
Minneapolis
Chairmen
Deputy Chairmen
1/ Mr. John Sagan
_
Vice President - Treasurer
Ford Motor Company
The American Road
Dearborn, Michigan 48121
Mr. Armand C. Stalnaker
Chairman of the Board
General American Life Insurance Co.
P.O. Box 396
St. Louis, Missouri 63166
2/ Mr. Stephen F. Keating
— Midwest Plaza Building
Suite 1930
801 Nicollet Avenue
Minneapolis, Minnesota
55402
Mr. Stanton R. Cook
President
Tribune Company
435 North Michigan Avenue
Chicago, Illinois 60611
Mr. William B. Walton
Vice Chairman of the Board
Emeritus
Holiday Inns, Inc.
1052 Brookfield Road
Memphis, Tennessee 38117
Mr. William G. Phillips
Chairman and
Chief Executive Officer
International Multifoods
1200 Multifoods Building
Minneapolis, Minnesota 55402
Kansas City
Mr. Paul H. Henson
Chairman
United Telecommunications, Inc.
(MAILING ADDRESS: United Telecom,
Box 11315, Kansas City,
Missouri 64112)
Dr. Doris M. Drury
Professor of Economics:
Director of Public Affairs
Program - University of Denver
10879 E. Powers Drive
Englewood, Colorado 80111
Dallas
Mr. Gerald D. Hines
Owner
Gerald D. Hines Interests
2100 Post Oak Tower
Houston, Texas 77056
(MAILING ADDRESS: Federal
Reserve Bank of Dallas, Station K,
Dallas, Texas 75222)
Mr. John V. James
Chairman of the Board
Dresser Industries, Inc.
P.O. Box 718
Dallas, Texas 75221
San Francisco 3/ Mr. Cornell C. Maier
Chairman, President and
Chief Executive Officer
Kaiser Aluminum & Chemical Corp.
300 Lakeside Drive
Oakland, California 94643
Mrs. Caroline L. Ahmanson
Chairman of the Board
Caroline Leonetti, Ltd.
c/o Mrs. Howard Ahmanson
9500 Wilshire Boulevard
Belerly Hills, California
1/ Member, Executive Committee, Conference of Chairmen
2/ Chairman, Executive Committee, Conference of Chairmen
-I/ Vice Chairman, Executive Committee, Conference of Chairmen
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
90212
October 30, 1981
The Hoorable Jake Garn
ted States Senate
achington, D.C. 20510
JMB/TEA/RS:wja
Dear Senator Cam:
>,
cclleaues and I on the Board of Governors want to thank you
to speak at the evening session of our Conference of Chairmen
Ca:r.Ten of the Federal Reserve Banks on Thursday, December 3
rcate Hotel. We will begin with cocktails at approximately
Le
hut z::nrier doesn't start until 7:00, and I think it would be
if you could arrive any time during the reception. We also understand
•
durin tat particular evening, you may be required to vote on the
>ncttt floor. To handle that contingency, we will arrange to have one of
cars and a driver at your disposal for the evening.
As you are aware, each Federal Reserve Bank and branch has a
ard o Ciroctors ccx:rprising a wide occupational diversification including
ranoracturing, education, agriculture, and the service industries.
2r1 and Deputy Chairmen of the Banks play a particularly important
,dersip role in the System as well as in their own communities and inI av enclosed a current list of the Conference's participants
all of whom I expect will attend -- for your information.
For the December meetino, we traditionally invite several addie:Qqa1 e: k,ctors ;';..o will be designated as Chairmen or Deputy Chairmen for
.;,,ar as well a few of the senior Board staff, so there will be
aout forty individuals in attendance. I am sure that they would be in• rasted in a.,y topic or issue that you would wish to discuss from your
vantge paint as ChairPan of the Banking Committee. The program will be
totally off the record, with no media representation.
it$
0
tr) tt) 0
- (1) •r- E
I 2reatly appreciate your planning to join us.
r
0 r- C •r- r- S(-)
S-
Sincerely,
>
2_41A
41.
Epclosure
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
P. 1
CHAIRMEN AND DEPUTY CHAIRMEN OF THE FEDERAL RESERVE BANKS
1981
Bank
Chairmen
Deputy Chairmen
Boston
Mr. Robert P. Henderson
Chairman and
Chief Executive Officer
Itek Corporation
10 Maguire Road
Lexington, Massachusetts 02173
Mr. Thomas I. Atkins
General Counsel
National Association for the
Advancement of Colored People
1790 Broadway
New York, New York 10019
New York
Robert H. Knight, Esq.
Partner
Shearman and Sterling, Attorneys
53 Wall Street
New York, New York 10005
Dr. Boris Yavitz
Dean
Graduate School of Business
101 2ris Hall
Columbia University
New York, New York 10027
Philadelphia
Mr. John W. Eckman
Chairman and
Chief Executive Officer
Rorer Group Inc.
500 Virginia Drive
Fort Washington, Pennsylvania
Dr. Jean A. Crockett
Chairman
Professor of Finance
Department of Finance
Wharton School
University of Pennsylvania
Philadelphia, Pennsylvania
19104
Cleveland
Mr. J. L. Jackson
Executive Vice President and
President - Coal Unit
Diamond Shamrock Corporation
1200 First Security Plaza
Lexington, Kentucky 40507
Mr. William H. Knoell
President and
Chief Executive Officer
Cyclops Corporation
650 Washington Road
Pittsburgh, Pennsylvania 15228
Richmond
Mr. Maceo A. Sloan
Executive Vice President and
Chief Operating Officer
North Carolina Mutual Life
Insurance Company
Mutual Plaza
Durham, North Carolina 27701
Dr. Steven Muller
President
The Johns Hopkins University
Charles and 34th Streets
Baltimore, Maryland 21218
Atlanta
Mr. William A. Fickling, Jr.
Chairman and Chief Executive
Charter Medical Corporation
P.O. Box 209
Macon, Georgia 31202
Mr. John H. Weitnauer, Jr.
Chairman and
Chief Executive Officer
Ricbway
P.O. Box 50359
Atlanta, Georgia 30302
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
00,
19034
P. 2
CHAIRMEN AND DEPUTY CHAI'MEN OF THE FEDERAL RESERVE BANKS
1981
Bank
Chicago
St. Louis
Minneapolis
Deputy Chairmen
Chairmen
1/ Mr. John Sagan
— Vice President - Treasurer
Ford Motor Company
The American Road
Dearborn, Michigan 48121
Mr. Armand C. Stalnaker
Chairman of the Board
General American Life Insurance Co.
P.O. Box 396
St. Louis, Missouri 63166
2/ Mr. Stephen F. Keating
- Midwest Plaza Building
Suite 1930
801 Nicollet Avenue
Minneapolis, Minnesota
55402
Mr. Stanton R. Cook
President
Tribune Company
435 North Michigan Avenue
Chicago, Illinois 60611
Mr. William B. Walton
Vice Chairman of the Board
Emeritus
Holiday Inns, Inc.
1052 Brookfield Road
Memphis, Tennessee 38117
Mr. William G. Phillips
Chairman and
Chief Executive Officer
International Multifoods
1200 Multifoods Building
Minneapolis, Minnesota 55402
Kansas City
Mr. Paul H. Henson
Chairman
United Telecommunications, Inc.
(MAILING ADDRESS: United Telecom,
Box 11315, Kansas City,
Missouri 64112)
Dr. Doris M. Drury
Professor of Economics:
Director of Public Affairs
Program - University of Denver
10879 E. Powers Drive
Englewood, Colorado 80111
Dallas
Mr. Gerald D. Hines
Owner
Gerald D. Hines Interests
2100 Post Oak Tower
Houston, Texas 77056
(MAILING ADDRESS: Federal
Reserve Bank of Dallas, Station K,
Dallas, Texas 75222)
Mr. John V. James
Chairman of the Board
Dresser Industries, Inc.
P.O. Box 718
Dallas, Texas 75221
San Francisco 3/ Mr. Cornell C. Maier
- Chairman, President and
Chief Executive Officer
Kaiser Aluminum & Chemical Corp.
300 Lakeside Drive
Oakland, California 94643
Mrs. Caroline L. Ahmanson
Chairman of the Board
Caroline Leonetti, Ltd.
c/o Mrs. Howard Ahmanson
9500 Wilshire Boulevard
BeVerly Hills, California
1/ Member, Executive Committee, Conference of Chairmen
2/ Chairman, Executive Committee, Conference of Chairmen
7/ Vice Chairman, Executive Committee, Conference of Chairmen
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Federal Reserve Bank of St. Louis
90212
AI
October 30, 1981
Professor Henry Alsobrook
Asst. Professor of Economics
Lambuth College
Sackson, Tennessee
Dear Professor Alsobrook:
Thanks for sending me your suggestions.
After
looking at them I will forward them to interested members
of the staff for their review.
Sincerely,
RS:tn
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 30, 1981
Ar. Carl A. Baumann
President
Kentucky Kitchens ex Millwork
Supply, Inc.
1046 Searcy Way
Bowling Green, Kentucky 42101
Dear Mr. Baumann:
Thank you for your letter regarding the effects high interest rates
are having on the economy. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
3Fsevjj
#3977
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 30, 1981
Mr. Howard H. Bestul
Howard H. Bestul Realty, Ltd.
Box 251
Iola, Wisconsin 54945
Dear ,,Ir.Bestul:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high Inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. the only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BF:evjj
#3934
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
)ctober 30, 1981
Mr. Carig A. Christensen
Dear Mr. Christensen:
Thank you for your letter expressing the problems encountered by
both you and your family as a result of high interest rates. I sincerely regret
the difficulties you expressed. These are very troubling times, and I am not
insensitive to the problems experienced by many individuals.
A substantial and lasting improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
wish
that things will be better for you in the future.
fervent
Sincerely,
BFsevjj
#3964
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 30, 1981
Ms. Mary Anne Gottfried
Dear Ms. Gottfried:
Thank you for your letter expressing the problems high interest
rates have caused you and your family. I sincerely regret the difficulties you
expressed. These are very troubling times, and I am not insensitive to the
problems experienced by many individuals.
A substantial and lasting improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
fervent wish that things will be better for you in the future.
Sincerely,
BFxvjj
#4021
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 30, 1981
Mr. Ray J. Greene, President
Classified International
Advertising Services, Inc.
3211 North 74th Avenue
Hollywood, Florida 33024
Dear Mr. Greene:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
13Ftevjj
#4465
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 30, 1981
\it% Lee Hardy
Dear Mr. Hardy:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
Ftev jj
04380
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
.1j,
1981
Ar. Tweed Hunter
Dear Mr. Hunter:
Thank you for your letter urging that substantial down payment be
required on all credit purchases. I appreciate your suggestion; however, our
experience with credit controls last year only confirmed our view regarding the
difficulties with any attempts to allocate credit or intervene substantially in
the credit decisions of private lenders. To have lower interest rates and a more
stable economy, we must have a sustained reduction in inflation, and monetary
and fiscal policies must work to achieve these objectives.
I appreciate your writing.
Sincerely,
31::evjj
lertr+
,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy '7Colfe
)orothy Saunders
October 30, 1981
Ms. Nancy A. Katzen
Laura of Dallas, Inc.
1402 North Peak Street
Dallas, Texas 75204
Dear Ms. Katzen:
Thank you for your letter expressing the effects high interest rates
have had on you, your suppliers, and your customers. I sincerely regret the
difficulties you expressed. These are very troubling times, and I am not
insensitive to the problems experienced by many Individuals.
A substantial and lasting Improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
fervent wish that things will be better for you in the future.
Sincerely,
jj
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy 'Wolfe
'Iorothy Saunders
October 30, 1981
Mr. and Mrs. Jospeh A. Ladau
Dear Mr. and Mrs. Ladau:
Thank you for your letter expressing your concern over the effects
high interest rates have had on home buyers, and the problems the high interest
rates have caused you. I sincerely regret the difficulties you expressed. These
are very troubling times, and I am not insensitive to the problems experienced
by many individuals.
A substantial and lasting improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
fervent wish that things will be better for you in the future.
Sincerely,
BF:evjj
#3970
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 30, 1981
Mr. 3. 3. Lux
Dear 'Ir. Lux:
Thanks for sending me your postcard regarding the effects of high
interest rates on housing. I understand what is happening and I am sympathetic
to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries while
some other sectors of the economy have been relatively unaffected. Current
interest rates, however, are a reflection of strong private credit demands
combined with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply too
aggressively, I am convinced the resultant increase in inflationary expectations
would lead to even higher interest rates. The only solution I see in the short run
is further action to reduce the Federal deficit.
I know this may sound a hit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BFrevn
#3119
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 30, 1981
Mr. Harry Nonken
Nonken Plaza Properties
Rt. 3, Box 626
Marble Falls, Texas 786)4
Dear Mr. Nonken:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While 1 understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BF:evii
#40I4
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 30, 1981
Ms. Loretta L. See
St. Clair Floral & Gift Shop
9101 St. Clair Avenue
Fairview Heights, Illinois 62208
Dear \is. See:
Thank you for your letter expressing your dissatisfaction with the
state of the economy and the high interest rates. I sincerely regret the
difficulties you expressed. These are very troubling times, and I am not
insensitive to the problems experienced by many individuals.
A substantial and lasting improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
fervent wish that things will be better for you in the future.
Sincerely,
BF:evjj
#4092
CC;
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy I/olfe
Dorothy Saunders
October 30, 1981
Mr. Johnson B. Stearns
President
Citizens State Bank
Lincoln County Branch
Carrizozo, New 'ilexico 83301
Dear Mr. Stearns:
Thank you for your letter expressing concern over the effects
some high yield investments are having on the economy. From your letter's
tone, I believe you are referring essentially to money market funds. 'Ve at the
Federal Reserve understand the concerns that prompted your message.
The question you raised about money market mutual funds is an
important one involving several complicated and conflicting considerations.
"vioney market funds have grown rapidly. Being free from many constraints to
which banks and thrift institutions are subject, particularly interest rate
ceilings, a significant portion of the money flowing into these funds has been
diverted from depository institutions.
It is apparent that the availability of these funds has benefited
investors, but there are obvious costs. The money funds, tend, for example, to
divert resources from smaller banks and thrifts, in effect channeling money
away from borrowers dependent on these institutions. This is a matter of
concern to the Federal Reserve, as we do not take lightly the erosion of the
competitive position of our banks and thrifts or of regulatory coverage. Also,
with continued rapid growth, these funds and other new instruments could make
monetary policy more difficult to implement.
The government is taking a number of steps to reduce regulation
of banks and thrift institutions. Most significantly, Congress has charged the
Depository Institutions Deregulation Committee to remove interest rate
ceilings on time and savings deposits over the next several years. These steps
should, over time, improve the competitive position of traditional depository
institutions, but there are legal and practical limits on the speed of change in
this area.
In this circumstance there are those who call for imposition of
stringent regulation on money market funds. However, this approach would
significantly penalize savers, and we think it is important to maintain
attractive incentives for saving. At another extreme, there is a temptation for
government to do nothing at all.
This course involves some potential
disadvantages for small businesses and other borrowers dependent on non-money
center banks. It would, as well, lead to an erosion of the Federal Reserve's
ability to interpret monetary data and to control the money supply.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 30, 1981
Is. Nina Stern
Abundant Supply
1706 E. 2nd
Edmond, Oklahoma 73034
Dear
kAs.
Stern:
Thank you for your postcard regarding the effects of high interest
rates on the economy. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
Inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
3996
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Page Two
The Federal Reserve has proposed an approach designed to (I)
provide the framework for fair competition between the money market mutual
funds and established depository institutions,(2) protect against erosions in our
ability to measure and control money stock, and (3) maintain attractive
incentives for saving. Simply stated, that proposal involves the extension of
Federal Reserve requirements to a portion of these funds that correspond most
closely to transactions or checking accounts. It would not affect investments in
money funds to the extent they more closely resemble personal savings, because
as mentioned we believe it is important to encourage personal savings, and it
would not entail extension of other banking regulations for these funds. In
time, as interest rate ceilings are phased out, and as the constellation of
interest rates change, the relative advantages and disadvantages of money
market funds vis-a-vis depository institutions would reflect market
competition. Meanwhile individuals and businesses would continue to have a
full range of investment choices.
This proposal is straightforward and simple. It is not an effort to
turn back the clock or stifle a new institution in any sense, but to provide a
logical framework for the evolution of the nation's financial system compatible
with the needs of public policy.
I am sure you will understand that much more could be said about
so complex a subject, and I appreciate your interest.
Sincerely,
t3F:evjj
114243
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 30, 1981
Mr. Ted Stone
Dear Mr. Stone:
Thank you for your letter regarding the problems high interest rates
have caused your father-in-law. I sincerely regret the difficulties you
expressed. These are very troubling times, and I am not insensitive to the
problems experienced by many individuals.
A substantial and lasting improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
fervent wish that things will be better for you in the future.
Sincerely,
BF:evij
3280
CC2
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 30, 1981
Mr. Robert Sullins
Sullins Companies
1164 W. Pioneer Parkway
Arlington, Texas 76013
near Mr. Sullins:
Thank you for your correspondence urging that large mandatory
payments
be required on credit purchases. I appreciate your suggestion;
down
however, our experience with credit controls last year only confirmed our view
regarding the difficulties with any attempts to allocate credit or intervene
substantially in the credit decisions of private lenders. To have lower interest
rates and a more stable economy, we must have a sustained reduction in
inflation, and monetary and fiscal policies must work to achieve these
objectives.
I appreciate your writing.
Sincerely,
liFtevjj
f74083
CC:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
F
October 30, 1981
Mr. L. Carlton Tyson
President
Ty-Par Realty, Inc.
Post Office Box 763
Monroe, North Carolina 28110
Dear ',ir. Tyson:
Thank you for your letter expressing the problems high interest
rates have caused you and the employees of your realty firm. I sincerely regret
the difficulties you expressed. These are very troubling times, and I am not
insensitive to the problems experienced by many individuals.
A substantial and lasting improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
fervent wish that things will be better for you in the future.
Sincerely,
BNev ji
#4022
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 30, 1931
Mr. Leonard J. Williams
Williams .3c Huffman, P.A.
Suite 206
8520 Connecticut Avenue
Chevy Chase, Maryland 20815
Dear Mr. Williams:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands conthined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
Is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BF:evil
413949
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 30, 1981
Professor Xenophon Zolotas
Bank of Greece
P.O. Box 105
21, El. Venizelos Avenue
Athens, Greece
Deer Professor Zolotas:
On behalf of the Board of Governors, I extend sincere
best wishes as you leave the Bank of Greece. We have appreciated
the spirit of friendship which has prevailed between our two
Institutions during your long tenure as Governor. We have benefitted from your insights and contributions on a wide range of
International policy issues. We hope to continue hearing your
views on these important topics.
We wish you every success in your future endeavors.
Sincerely,
Paul A. Volclker
10/30/81
KH8:pa
bcc: Mrs. Mallardi
Mr. Truman
Mr. Siegman
Mr. Spencer
Ms. Lockhart
Ms. Brown
October 29, 1981
Mr. Eric B. Anderson
Branch Manager
Metal Supply Company
6870 North Fathom
Portland, Oregon 97217
Dear Mr. Anderson:
Thank you for your letter regarding the effects high interest rates
have had on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
11Ftev jj
#4048
CC2
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. Gerasimos Arsenis
Governor
Rank of Greece
P.O. Box 105
21, EL Venizelos Avenue
Athens, Greece
Dear Governor Arsenis:
On behalf of the Board of Governors, I extend sincere
coneratulations on your appointment as Governor of the hank of
Greece. Our two institutions have a history of friendship and
cooperation, and we look forward to the continuation of those
relations in the years ahead.
Best wishes for a successful term in office.
Sincerely,
Paul A. VoIcicer
10/29/81
KM8:pa
bcc; Mrs. iiallardi
Mr. Truman
Mr. Siegman
Ms. Lockhart
Mr. Spenser
Mrs. Brown
October 29, 1981
Mr. Wendell L. Esplin
Dear Mr. Esplin:
Thank you for your letter requesting the effects high interest
rates are having on your ability to purchase a home. I understand the concerns
that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation In interest rates.
However, a substantial and long-lasting improvement In interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:ev jj
04352
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. Donald W. Barragree
Barragree's Rent-All
1500 S. Broadway
Salina, Kansas 67401
Dear Mr. Barragree:
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BFsevjj
#4427
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. John E. Bazle
Dear Mr. Bazle:
Thank you for your letter requesting that I work to lower the
interest rates. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
a
However,
substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; It must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4066
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mr. Clyde E. Blakenship
:entury 21/Blankenship Realty, Inc.
10306 Lincoln Trail
Fairview Heights, Illinois 62208
Dear Mr. Blankenship:
Thank you for your letter expressing your confusion as to the "point
spread" between the prime rate and the Consumer Price Index. I am aware of
the problems high interest rates have caused, and I understand the concerns
that prompted you to write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Thank you again for taking the time to write.
Sincerely,
October 29, 1981
Mr. R. W. Bowers, President
Dear Mr. Bowers:
Thank you for your letter regarding the effects of high interest
rates. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
13Fsevil
#3945
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mr. Ron Brewton
Dear Mr. Brewton:
Thank you for your letter asking that I explain the monetary
policy of the Federal Reserve, and its goals. I understand the concerns that
prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BFlevij
04437
CC:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mr. Armand L. Buszko
Southern Maryland Carpentry
Rt. I, Box 5
Mechanicsville, Maryland 20659
Dear Mr. Buszko:
Thank you for your letter regarding the effects high interest rates
have had on your building business. I understand the concerns that prompted
your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make It more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evij
14005
CC:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
'vit.. Russ Caswell
Century 21-Wilson Realty
2401 S. 9th Street
Salina, Kansas 67401
Dear Mr. Caswell:
Thank you for your letter asking that I do something to lower the
interest rates. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
anevjj
#4452
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mr. Clyde E. Chapman, CPrA
Broker in Charge
Heritage Real Estate Compnay, Inc.
123 By Pass
Easley, South Carolina 29640
Dear Mr. Chapman:
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of Interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make It more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4481
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
.is. Charlene Chaytor, Realtor
Norman Kaye Real Estate Co.
4813 Paradise Road, #19
Las Vegas, Navada 89109
Dear Ms. Chaytor:
Thank you for your letter expressing what you feel to be the
effects high interest rates have had on the economy and the public's ability to
maintain its necessities. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4046
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mr. Jerry Dahlsten
Director of Production
and Transportation
Hy-Way Asphalt Products, Inc.
P.O. Box 206
Salina, Kansas 67401
Dear Mr. Dahlsten:
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiInflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
14448
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. Richard C. Duncan
President
Sun Ray Solar Systems
1136 Saranap Avenue
Suite P
Walnut Creek, California 94596
Dear Mr. Duncan:
Thank you for your letter requesting that I attempt to lower
interest rates to help enhance the affordability of solar energy systems. I
understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
4102
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Ms. Donna J. Elder
Dear Mr. Elder:
Thank you for your letter regarding the effects of high interest
rates on farmers, business people and individuals. I understand the concerns
that prompted your message.
I should note that the Federal Reserve is not trying to maintain
particular
level of interest rates. Instead our policy is directed towards
any
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts In public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
13Ftevij
#4111
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
\Ir. George Fleeson
CoId well Banker
3775 Citadel Drive North
Colorado Springs, Colorado 80909
Dear Mr. Fleeson:
Thank you for your letter regarding the effects high interest rates
having
are
on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
114492
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. & virs. Morriss E. Foster
Dear Mr. and Mrs. Foster:
Thank you for your letter regarding the effects of high interest
I understand the concerns that prompted your message.
economy.
rates on the
I should note that the Federal Reserve is not trying to maintain
level of interest rates. Instead our policy is directed towards
particular
any
growth in money and credit. History shows that no antiexcessive
restraining
be successful without such an effort.
can
program
inflation
In an economy that is expanding, with prices still not acceptably
loan demand and inflationary expectations conflict with the
strong
stable,
to moderate money and credit growth, leading to pressures in
efforts
necessary
This situation is particularly difficult for those who are
markets.
financial
market pressures. But if we do not bring inflation
credit
most vulnerable to
for all of us will be much greater in the long run.
problems
under control the
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
:evjj
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy liolfe
--lorothy Saunders
October 29, 1981
J. DeWitt Fox, M.D.
Neurologic Center
7080 Hollywood Boulevard
Sixth Floor
Los Angeles, California 90028
Dear Dr. Fox:
Thank you for your letter regarding your problems collecting for
your medical services due to high interest rates. I understand the concerns that
prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit inarket pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4027
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
..)orothy Saunders
October 29, 1981
Mr. John S. Frisby, President
Nationwide Lending Group, Inc.
One Central Plaza
11300 Rockville Pike
Rockville, Maryland 20852
Dear Mr. Frisby:
Thank you for your letter expressing concern over the point
difference between the prime rate and the Consumer Price Index. I am aware
of the problems high interest rates have caused, and I understand the concerns
that prompted you to write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
liFsevjj
03972
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. W. Charles Gagon
Vice President - Treasurer
Ballou Construction Co., Inc.
P.O. Box 206
Salina, Kansas 67401
Dear Mr. Gagon;
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in Inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
3F:evjj
44479
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr.Fred Griffin
Dear Mr. Griffin:
Thank you for your letter expressing the effects high interest
rates have had on the economy. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
F:ev jj
d3967
cc:
https://fraser.stlouisfed.org
0
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Nis.
Lisa Helms
Dear Ms. Helms:
Thank you for your letter regarding the possibility of your not
being able to realize "the American Dream" of major credit purchases due to
continued high interest rates. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
EiFtevjj
#4178
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mr. Bill Hiner
Bill Hiner and Company
3548 South Hillcrest Drive
Denver, Colorado 80237
Dear Mr. Hiner:
Thank you for your letter regarding the effects of high interest
rates on the economy. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress In
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
F:evjj
#4013
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mr. Jack Jeter
Dear Mr. Jeter:
Thank you for your letter regarding the effects of high interest
economy.
I understand the concerns that prompted your message.
rates on the
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting Improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4371
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. Lester H. Kahler, Jr.
Colo Rock Decorative
Stone, Inc.
2610 Delta Drive
P.O. Box 15129
Colorado Springs, Colorado 80935
Dear Mr. Kahler:
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But If we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
liFtev}j
.4475
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. John H. Keppel
Dear Mr. Keppel:
Thank you for your letter suggesting that the interest rates should
be more closely set to the current inflation rate of the Consumer Price Index. I
am aware of the problems high interest rates have caused, and I understand the
concerns that prompted you to write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
BF:evjj
041:36
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Ms. Doris M. Kloepper
Dear Ms. Kloeppers
Thank you for your letter regarding the effects high interest rates
have had on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
Bnev jj
#4097
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
•
October 29, 1981
Mrs. McWesley Ledbetter
Dear Mrs. Ledbetter:
Thank you for your letter regarding the effects of high interest
rates on the economy. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
3Psevjj
14411
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mrs. Rosa L. Letcher
Dear Mrs. Letcher:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is i:nportant,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
F:ev jj
1/4236
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mrs. Anna Limkel
Dear Mrs. Limkel:
Thank you for your letter regarding the potential effects of high
interest rates on home buyers. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
F:evjj
#4416
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mk. Leland 3- Lykke
President
First Federal Savings
and Loan Association
BrrAdway at heia
Council Bluffs, Loam 51501
Dear Mr. Lykke:
appreciate having your comments concerning recent
Motions of the DIDC and your views regarding the appropriate
pace for deregulation.
Let me add that I underataDd the con-
cerns which prompted you to write and I will bear them in sand
at meetings of
dm
DEC.
Sincerely,
NB:cak
#5222
CC:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mrs. Mallardi (2)
Mr. Bernard
October 29, 1981
Mr. Scott D. Miller, Sr.
President
Miller's
714 South Main
Roswell, New Mexico 88201
Dear Mr. Miller:
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth In money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
13F:evjj
(14406
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. David C. Moak
P.O. Box 1034
Hurst, Texas 76053
Dear Mr. Moak:
Thank you for your letter regarding the effects of high interest
rates on your business. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
3F:evjj
W4019
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
•
t..)ctober 29, 1981
Mrs. Hobart Moody
Dear Mrs. Moody:
Thank you for your letter requesting to know how the Federal
t rate
Reserve could help the American people during the current high interes
e.
messag
problem. I understand the concerns that prompted your
I should note that the Federal Reserve is not trying to maintain
towards
any particular level of interest rates. Instead our policy is directed
no
antithat
shows
restraining excessive growth in money and credit. History
inflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
with the
stable, strong loan demand and inflationary expectations conflict
pressures in
necessary efforts to moderate money and credit growth, leading to
who are
financial markets. This situation is particularly difficult for those
inflation
most vulnerable to credit market pressures. But if we do not bring
run.
under control the problems for all of us will be much greater in the long
As you know, there is considerable fluctuation in interest rates.
interest rates
However, a substantial and long-lasting improvement in
n. As we
inflatio
in
on
reducti
ed
sustain
a
about
ultimately depends on bringing
to control
have long maintained, we cannot rely on monetary restraint alone
nt. The
restrai
fiscal
by
mented
comple
and
d
inflation; it must be balance
any measure,
borrowing requirements of the Federal Government, huge by
sector to
private
the
for
t
difficul
more
it
make
and
strain financial markets
some essential
borrow. The Administration has proposed many and realized
Congress in
the
and
tration
Adminis
the
of
cuts in public spending. The success
support and
the
on
s
depend
deficit
Federal
reducing spending and ultimately the
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
04344
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. Richard A. Mueller
Concept Builders, Inc.
740 Citadel Drive East
Suite 402
Colorado Springs, Colorado 80909
Dear Mr. Mueller:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well Intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
'3 Ftevjj
4446
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1961
Mr. Charles U. Nelson
President
Backus State Bank
Backus, Minnesota 56435
Dear Mr. Nelson:
Thank you for your letter of October 23
I want to
assure you that I understand the concerns which prompted you to
write. With respect to your specific suggestions for increasing
reserve requirements against "jumbo" CD's, I would note that
current legislation sets a ceiling of 9 percent (a range of 0 to
9 percent) on the reserves that the BcArd may require against
"nonpersonal time deposits." I discussed the ctmpetitive problem
of money market mutual funds in Congressional testimony some time
ago, and I am enclosing a copy of my remarks in the thought that
you may find them of interest.
Sincerely,
Enclosure
5-7
6/25/81 Volcker Testimony
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mrs. Mallardi (2)
Mr. Bernard
October 29, 1981
Mr. and Mrs. Theophll M. Oravetz
Dear Mr. and Mrs. Oravetz:
Thank you for your letter regarding the effects high interest rates
have had on you and your husband's ability to sell your old home and buy a new
one. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#3294
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy -Voile
Dorothy Saunders
dr
October 29, 1981
Ms. Carol A. Piper
Dear Ms. Piper:
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
afterjj
/4460
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. Rolland A. Ramos
Dear Mr. Ramos:
Thank you for your letter regarding the problems you have had in
getting a car and a house due to the high interest rates. I understand the
concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
#4404
cc,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
-MN
October 29, 1981
Mr. James A. Remington
Sr. Vice President-`Aanufacturing
Philip Morris
U.S.A.
P. 0. Box 26603
Richmond, Virginia 23261
Dear Mr. Remington:
Thank you for your letter regarding your opinion of the monetary
policies of the Federal Reserve. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, ,ve cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
3F:evjj
#3265
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sisady
i_lorothy Saunders
October 29, 1981
Ms. Mary L. Riley
Bookkeeper
Brunson Brick dr Stone, Inc.
606 27th Street & 515 32nd Street
Lubbock, Texas 79404
Dear Ms. Riley:
Thank you for your letter regarding the effects high interest rates
have had on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater In the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4084
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
'As. Mary E. Robbins
Dear Ms. Robbins:
Thank you for your letter regarding the effects high interest have
had on many businesses and individuals. I understand the concerns that
prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BFsevjj
#4395
ccz
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mr. Bob Saxon, Realtor
Box Saxon Realty
Citizens Bank Building
Paducah, Kentucky 42001
Dear Mr. Saxon:
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make It more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
sinevjj
#4311
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
As. Nancy Scaggs
Dear Ms. Scaggs:
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4361
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. Ricardo M. Senteno
Agency Manager
State Farm Insurance
2908 Anna J. Drive
Roswell, Nevi Mexico 88201
Dear Mr. Sentenos
Thank you for your letter regarding the effects of high interest
rates on the economy. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
517sevil
#4200
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1931
Ms. Charlette Sharkey
Dear As. Sharkey:
Thank you for your letter regarding the problem you encountered
the
trying to purchase a condominium due to high interest rates. I understand
concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
s
any particular level of interest rates. Instead our policy is directed toward
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
with the
stable, strong loan demand and Inflationary expectations conflict
es in
to
pressur
leading
,
growth
credit
and
money
te
necessary efforts to modera
are
who
those
for
lt
difficu
larly
particu
is
on
financial markets. This situati
on
inflati
bring
not
do
we
if
But
es.
pressur
most vulnerable to credit market
run.
long
the
in
r
greate
much
be
will
us
of
under control the problems for all
As you know, there is considerable fluctuation in interest rates.
t rates
However, a substantial and long-lasting improvement in interes
As we
on.
inflati
in
on
ed
reducti
sustain
ultimately depends on bringing about a
control
to
nt
alone
restrai
ry
moneta
on
have long maintained, we cannot rely
nt. The
inflation; it must be balanced and complemented by fiscal restrai
measure,
any
by
huge
borrowing requirements of the Federal Government,
to
sector
private
the
strain financial markets and make it more difficult for
al
essenti
some
d
borrow. The Administration has proposed many and realize
in
ss
Congre
cuts in public spending. The success of the Administration and the
and
t
suppor
the
reducing spending and ultimately the Federal deficit depends on
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:ev jj
#4445
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
Mr. R. W. Sik
Dear Mr. Silc:
Thank you for your letter regarding the effects high interest rates
are having on your business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BFrevjj
04214
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a
October 29, 1981
Mr. Donald E. Simon
President
Don Simon, Inc.
200 Simon Mall West
Sun Prairie, Wisconsin 53590
Dear Mr. Simon:
Thank you for your letter regarding the effects of high interest
rates on your building business. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
;..iFsevjj
13989
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
3orothy Saunders
October 29, 1981
Mr. Jim Snell
Realtor
108 North Washington
P.O. Box 1330
Roswell, New Mexico 88201
Dear Mr. Snell:
Thank you for your letter regarding the effects high interest rates
have had on potential homebuyers and on the overall economy. I understand the
concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
LiFsevjj
4257
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. Bill Snow
Dear Mr. Snow:
Thank you for your letter regarding the monetary policy of the
Federal Reserve Board. I am sorry you hold the Board in such regard, but
perhaps current conditions make it difficult for you to understand or accept our
reasoning. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
fiFtevjj
1/4091
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 29, 1981
As. Susie Tamura
Dear Ms. Tamura:
Thank you for your letter suggesting that the interest rates be
lowered to aid the Administration's economic program. I understand
the
concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed toward
s
restraining excessive growth in money and credit. History shows that no
antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with
the
necessary efforts to moderate money and credit growth, leading to pressur
es in
financial markets. This situation is particularly difficult for those who
are
most vulnerable to credit market pressures. But if we do not bring inflatio
n
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interes
t rates
ultimately depends on bringing about a sustained reduction in inflation. As
we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint.
The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector
to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congres
s in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4463
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. Frank W. Tegethoff
Frank W. Tegethoff Construction
Company, Inc.
1/1 Glenette Court
St. Peters, Missouri 63376
Dear Mr. Tegethoff:
Thank you for your letter regarding the effects high interest rates
your business. I understand the concerns that prompted your
on
having
are
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and Inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting Improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make It more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4470
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Ms. Kim L. Tramm
V. President
Mardon Homes, Inc.
3585 Lexington Avenue, No.
Suite 175
Arden Plaza
St. Paul, Minnesota 55112
Dear Ms. Tramm:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help busin-sses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in rnoney would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
the Administration and Congress, is the best hope for attaining
of
initiatives
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:evjj
114375
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 29, 1981
Mr. John Weting, A.I.A.
Dear Mr. Weting:
Thank you for your letter regarding the impact of high interest
rates on home mortgages. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#3998
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 1981
Jay R. Anderson
Great Basin Engineering, Inc.
P.O. Box 9307
Odgen, Utah 84409
Dear Mr. Anderson:
Thank you for your letter regarding the effects of high interest
rates on various industries. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4334
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 1981
Mr. Robert E. Anderson
Anderson Realty Inc.
611 So. Farwell Street
Eau Claire, Wisconsin 54701
Dear Mr. Anderson:
Thank you for your letter regarding the effects monetary policy
has had on the housing and thrift industries.
The Federal Reserve and other financial regulatory agencies are
well aware of the difficult times facing the thrift industry, and we are
monitoring developments closely. As you know, the current high interest rate
environment places any institution with a large portfolio of fixed rate longterm assets in a very difficult position. The only really satisfactory solution is
to have the efforts of the Federal Reserve, the Administration, and the
Congress to reduce inflation become effective, for that will produce the
environment for a sustained reduction in interest rates.
However, there is no avoiding the fact that until that happens
many thrift institutions will be under severe pressure. As you know, Congress
and the regulatory agencies are actively assessing transitional measures
designed to help thrift institutions better weather the period until interest rates
come down and I appreciate your thoughts and concerns.
Sincerely,
13F:evjj
#3497
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lorothy Saunders
S
•
11),
1 — IY‘c
V - 30(
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
October 28, 1981
PAUL A. VOLCKER
CHAIRMAN
The Honorable Douglas Applegate
House of Representatives
Washington, D.C.
20515
Dear Mr. Applegate:
Thank you for your recent letter regarding the economic
situation and the impact of high interest rates. The conditions
you describe in your district are most distressing, and, of
course, they are not unique to your area. I am well aware that
these are difficult times for many households, businesses, and
governmental units across the country.
High interest rates are an important factor in the
difficulties of many industries today, but I think it must be
recognized that other problems exist as well--including prominently
in some of the instances you note years of unrealistic wage and
price increases that have made American firms less competitive
in the world marketplace. Indeed, inflation more broadly is at
the root of much of the economic stress we face, including high
interest rates.
There is simply no way that I know of
to reduce interest
rates on a sustained basis without restraining inflation and
lowering
the inflationary expectations of borrowers and lenders. To be sure,
the Federal Reserve could flood depository institutions with
reserves and drive down very short-term interest rates.
But this
would yield, at most, temporary relief from high short-te
rm rates,
lasting only until the resultant inflationary monetary
expansion
led to still greater pressures of credit demands on credit
supplies, and the market's anticipation of such effects might
even
result quite quickly in higher longer-term rates.
Public confidence in the Federal Reserve's commitment to anti-inflationar
y
monetary restraint is absolutely essential if
there is to be a
durable easing of interest rates. And, as has been
indicated by
the behavior of the bond markets in recent months, a credible
commitment to fiscal restraint--to the ending
of our persistent
federal budgetary deficits--is also crucial.
I believe we are beginning to see
signs of progress in
the fight against inflation. I would hope that the psycholo
gical
momentum that has made that progress so difficul
t will begin to
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The Honorable Douglas Applegate
Page Two
turn decisively in a more favorable direction, bringing about an
easing of financial tensions and paving the way to better economic
performance. To shift gears in monetary policy at this juncture,
it seems to me, would be to repeat the mistakes of the past and
to lose the hard-earned gains we have made to date.
I welcome this opportunIty for an exchange of views
on these important matters. A sincere dialogue can only be constructive as we work together to frame monetary and fiscal policies
that will serve the interests of our nation.
Sincerely,
S/Paul & Voice::
MJP:JLK:CO:pjt (#V-301)
bcc: Mr. Kichline
Mr. Prell
Mrs. Mallardi (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 28, 1981
Mr. Richard H. Ptshley, Vice President
Ho"!lyoak Inc.
6520 Tilden Lane
Rockville, Maryland 20852
Dear 14r. Ashley:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is hapaenin and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Peserve were to try to lower interest rates by expandino the money supply
too aggressively, I an convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to chanees in credit markets,
however, I do not believe there is any way of avoiding sorv of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
3F:seP
owe-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
4-16;1-
nctober
19q1
Mr. Louis Alton Best
Vice President
C-I Mitchell & nest Company
9313 Reach Road
Potomac, Maryland 20854
Dear Mr. Best:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the erowth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avoidino some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
;F:ser,
413,31
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
f7ctnor 2P, 1" 1
mr. Peter 3l1cher, Vice President
Interdevco Development Company
1771 Uayberry Drive
Pembroke Pines, Florida 33024
Dear tit% Blicher:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happening
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve 'must
moderate the growth of money in order to reduce inflation. If the Federal
Peserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn.
Sincerely,
BF:se°
#4373
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Nr. R. E. Carpenter
p.r). Sox 30515
Midwest City, Iklahoma
73140
Dear :4r. Carpenter:
Thank you for your letter regardine the effects high interest
rates have had on you and other builders. I understand what is happenine
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the econory have been relatively unaffected. Current interest
rates, however, are a reflection of strono private credit demands combined
with a larce Federal deficit at a time when the Federal Reserve must
mderate the orowth of money in order to reduce inflation. If the Federal
7eserve were to try to lower interest rates by expandine the money supply
too agoressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanoes in credit markets,
however, I rip not believe there is any way of avoidine sore of these basic
issues. lt any rate, it is ray fervent hope that we can all look forward to
an ft-prove/rent in inflation and interest rates before too long.
Sincerely,
F:sen
15314
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Ms. Mary Lou Crawford
Dear Ms. Crawford:
Thank you for your letter regarding the effects high interest rates
have had on your ability to make improvements on your house. I understand the
concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essentia
l
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
3Fsevjj
#4450
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 1981
Mr. Robert C. Douglas
Vice President
Corporate Development
Transohio Financial Corporation
One Penton Plaza
Cleveland, Ohio 44114
Dear Mr. Douglas:
Thank you for your letter of October 13.
I appreciate having
your views and experience with respect to the brokerage of All Savers
certificates.
You raise some legitimate questions about which I too
have been uneasy.
I cannot, of course, speak for my colleagues an the
DIDC, but I for one believe there would be merit in reviewing the
brokerage decision.
Sincerely,
/e
NAak
#4845
cc:
Mrs. Mallardi (2)
Mr. Bernard
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
rki,th,41:(
3o5)
.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
October 28, 1981
PAUL A. VOLCKER
CHAIRMAN
The Honorable Jim Dunn
House of Representatives
Washington, D. C. 20515
Dear Mr. Dunn:
Thank you for your recent letter regarding the problem
of high interest rates. We at the Board share your deep concern
about the economic health of our nation and we want to do what
we can to foster economic expansion.
It is our aim, however, to make sure that economic
expansion is sustainable, and the weight of historical evidence
is that there cannot be sustained prosperity in an environment
of rapid inflation.
For this reason, we have committed ourselves
to a policy of moderating the growth of money, recognizing that
progress toward price stability otherwise will be impossible.
While we would like to see an easing of interest rates,
we do not believe that it would be fruitful to pursue that objective by abandoning our course of monetary restraint. Such an
action would have disastrous effects on the attitudes of participants in financial markets. Borrowers and lenders alike would
respond in a fashion that would widen the "inflation premium"
in interest rates that serves to compensate for the lower purchasing power of the dollars used to repay debts. I think it
could be argued that the recent poor performance of the bond
markets demonstrates the potential for such a development, although in this case it has been fears of the possible inflationary
consequences of large federal budget deficits that has troubled
many investors.
You suggest that we may be restraining too severely the
growth of money. I would be the first to grant that there are
broad areas of judgment involved in monetary targeting. As we
look at the several monetary aggregates we follow, however, we
do not see evidence of excessively sharp deceleration in monetary
expansion.
At bottom, I'm afraid the crux of the matter is that,
in attempting to turn back a tide of inflation that has been
mounting for more than a decade, economic and financial stress
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
- The Honorable Jimiknn
Page Two
•
is almost inevitable. It is encouraging, however, that out of
this pain is coming some progress--price increases on average
have slowed this year. If we stick to our guns--with both
monetary and fiscal policy maintaining postures of restraint--I
think we can look forward to a gathering momentum in the process
of disinflation, with an accompanying easing of financial tensions. On the other hand, if we flinch at this juncture, I
fear that we will only be repeating the mistakes of the past
and squandering the hard-earned gains we have made.
Again, thank you for writing. I value the counsel
of you and your colleagues in the Congress and view our continuing dialogue as inevitably contributing to the improvement
of public policy.
Sincerely,
SiPatti A. Volcker
MJP:JLK:vcd (V-303)
bcc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. Prell
Mr. Kichline
Mrs. Mallardi (2)
fjctober 28, 1981
Mr. J. 9, Freeman
Pyramid Construction Company
6010 iorth Villa
Oklahoma City, Oklahoma 73112
Dear Mr. Free:,an:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rtes is undoubtedly havine A
particularly harsh imoact on credit-sensitive industries while some other
sectors of the e.conory have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
reserve were to try to lower interest rates by expandine the arney supply
too aggressively, I an convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. It any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
F:sef
#41,3
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
The Honorable Sam M. Gibbons
Chairman
Subcommittee on Trade
Committee on Ways and Means
House of Representatives
20515
Washington, D.C.
Dear Chairman Gibbons:
inviting the
Thank you for your recent letter
committee's hearing on
Board to testify before your Sub
of monetary and fiscal
U.S. trade policy and the impact
policies.
king forward to
Governor Henry C. Wallich is loo
Board on November 3.
appearing on behalf of the
Sincerely,
S/Paul A,
CO:pjt (#V-291 & 702)
bcc: Gov. Wallich
Ted Truman
Mrs. Mallardi (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Robert A. Hawkins, D.D.S.,P.C.
Dear Mr. Hawkins:
Thank you for your letter expressing your skepticism about the
soundness of the Federal Reserve's monetary policy. I understand the concerns
that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4472
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 1981
Mr. Gerald W. Hilker, President
Home Builders Association
of Fort Wayne
New World Homes, Inc.
3705 Pebblewood Place
Fort Wayne, Indiana 46904
Dear Mr. HiIker:
Thank you for your letter stating that interest rates should be
lowered immediately to save the economy. I understand the concerns that
prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evji
#4268
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 1981
Mr. Henry Hood, President
Mood Development Comany
15615 Memorial Drive il
Houston, Texas 77024
Dear Mr, tiood:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happening
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, hewever, are a reflection of strong private credit derendS combined
with a large Federal deficit at a tire when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Peserve were to try to lower interest rates by expanding the money supply
to aeeressively, I an convinced the resultant increase in inflationary
expectations would lead to even hillier interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore cf these basic
Issues. Pt any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
8F:sep
44378
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Jim Hopson
Jim Hopson Construction Co.
417 S.W. 65th
Oklahoma City, Oklahoma 73139
Dear Mr. Hopson:
Thank you for your letter asking about interest rates and their
relationship to the Consumer Price Index. I am aware of the problems high
interest rates have caused, and I understand the concerns that prompted you to
write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
BF:evjj
#4417
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Larry F. Kyte, President
Mutual Loan and Savings Company
15 South Main Street
Mechanicsburg, Ohio 43044
Dear Mr. Kyte:
Thank you for your letter regarding the effects high interest rates
are having on the savings and loan industry.
The Federal Reserve and other financial regulatory agencies are
well aware of the difficult times facing the thrift industry, and we are
monitoring developments closely. As you know, the current high interest rate
environment places any institution with a large portfolio of fixed rate longterm assets in a very difficult position. The only really satisfactory solution is
to have the efforts of the Federal Reserve, the Administration, and the
Congress to reduce inflation become effective, for that will produce the
environment for a sustained reduction in interest rates.
However, there is no avoiding the fact that until that happens
many thrift institutions will be under severe pressure. As you know, Congress
and the regulatory agencies are actively assessing transitional measures
designed to help thrift institutions better weather the period until interest rates
come down and I appreciate your thoughts and concerns.
Sincerely,
BF:ev jj
04072
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Dorothy Saunders
October 28, 1981
Mr. W. P. Larson
Dear Mr. Larson:
Thank you for your letter expressing your concern over the point
spread between the interest rates and the current inflation rate. I am aware of
the problems high interest rates have caused, and I understand the concerns
that prompted you to write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
f3F:evjj
0210
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Ben Lee
Belle Lee's Adobe Escondido
Route 2, i3ox 124
Los Lunas, New Mexico 87031
Pear r. Lee:
Thank you for your letter regarding the effects of high interest
rates on you and other members of the small business community. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh irract on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations vrould lead to even higher interest rates. The only solution
see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 28, 1981
Mrs. June E. Linse
Dear Mrs. Linse:
Thank you for your letter regarding the role the Federal Reserve
plays in the current interest rate problems and what we can do to help. I
understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
B.Fsevjj
#4315
ces
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy 'Nolte
Dorothy Saunders
October 28, 1981
Mr. Robert D. Lud<ett, Sr.
Dear Mr. Luckett:
Thank you for your letter regarding the problems high interest
rates have caused you in your efforts to sell your old home and buy a new one. I
understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
6F:evjj
V4252
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 21. 1981
Mr. Phil McGukin
McGukin Construction Company
Route 9, Box 389
Carrollton, Georgia 39117
')ear Mr. !IcGukin:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understend what is harpenine
and I ma sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve rust
moderate the orowth of money in order to reduce inflation. If the Federal
1;eserve were to try to lower interest rates by expandine the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this ray sound A bit abstract for businesses and
individuals who are particularly vulnerable to chanpes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
0F:sep
04343
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Thomas F. MacLean
Dear Mr. MacLean:
I want to thank you for your thoughtful letter.
your expression of support.
I appreciate
With regard to your inquiry on the use of various measures of
money in setting objectives for monetary growth, I would note that no
measure has proved to be a fully reliable guide over time. The reason
is, of course, that changes in our financial institutions and in our
payments mechanism are occurring with unprecedented rapidity. The
Federal Reserve has taken this phenomenon into account by revising the
definition of the monetary measures in light of new developments and by
varying the emphasis given to particular measures of money from time to
time. At present, about equal emphasis is given to Ml-B and to M2 in
the formulation of monetary policy. There habe been occasions over the
past year or two when more emphasis was given to one or the other of
these measures and indeed to other measures of money.
Should you wish to pursue this matter further, you might consult
the "Policy Records" of the Federal Open Market Committee which are prepared for each meeting of the Committee and published in the Board's Annual
Renort and in the Federal Reserve Bulletin.
I appreciate your interest in monetary policy and again thank
you for your support.
Sincerely,
NB:cak
#4961
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mrs. Mallardi (2)
Mr. Bernard
October 28, 1981
Mr. Owen L. Morrow, FACNHA
Administrator
Lakeview Christian Home
1300 North Canal
Carlsbad, New Mexico 88220
Dear Mr. Morrow:
Thank you for your letter regarding the effects high interest rates
have had on your community's economy. I understand the concerns that
prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. !listory shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
to
strain financial markets and make it more difficult for the private sector
essential
some
realized
and
many
proposed
has
borrow. The Administration
in
cuts in public spending. The success of the Administration and the Congress
and
support
the
on
depends
deficit
Federal
reducing spending and ultimately the
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
#4348
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy %Voile
Dorothy Saunders
October 28, 1981
Ms. Nancy R. O'Neal
Dear Ms. O'Neal:
ciates urging
Thank you for the letter from you and your asso
on and the Congress
the Federal Reserve to work with the Administrati
e of the burden high interest
to bring interest rates down. I am well awar
the economy, and I am sympathetic
rates have placed on certain segments of
to your concerns.
d lower interest
I believe that we will not achieve sustaine
reduction in inflation. Simply
rates until we bring about a lone-term
problem, because inflationary
creating more money now would worsen the
higher interest rates.
expectations would surge, leading to still ility, therefore, unavoidDefeating inflation and restoring price stab
ably requires restrained money growth.
people. As
I know this has been a difficult time for many nistration
Admi
the
of
e
thos
our efforts, however, are combined with
reductions in government
and Congress -- particularly if further
eved -- I believe that
spending and the Federal deficit can be achi
rates may be eased; and things
pressures on credit markets and interest
will be better for all of us in the future.
Sincerely,
WF:sl
#4249
cc: Dorothy Saunders (1)
Sandy Wolfe (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Epifanio Provencio
Automotive Instructor
Gadsden High School
Route 1, Box 263
Anthony, New Mexico 88021
Dear Mr. Provencio:
Thank you for your letter requesting that I attempt to lower the
interest rates. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BFtev jj
#4499
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 1981
Mr. Gary D. Rappaport
P.n. ox 503
?.,, errifield, Virginia 22116
Dear Mr. Rappaport:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh imoact on credit-sensitive industries while sore other
sectors of the ecnnomy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combine
with a large Federal deficit at a time when the Federal Reserve must
enderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandine the money supply
too agnressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a it abstract for businesses and
Individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lona.
Sincerely,
3F:sep
0325
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Clifford B. Rearick
Patwil, Inc.
RD #6, Box 56
Indiana, Pennsylvania 15791
Dear Mr, Rearick:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hioher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
8F:sep
04369
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. F. Tiers Rice, Vice President
Preferred Homes, Inc.
1 Chick Springs Road - Suite 201
Greenville, South Carolina 29609
Dear mr. Rice:
Thank you for your letter regarding the effects high interest
rates have had on you and pther builders. I understand what is happening
and I em srepathetic to your concerns.
The current level of interest rates is undoubtedly hevine a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Peserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
;F:sep
#4293
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Joseph M. Rowe
Maryland General Realty Company, Inc.
P. O. Box 1288
Hagerstown, Maryland 21740
Dear Mr. Rowe:
Thank you for your letter urging the Federal Reserve to work
with the Administration and the Congress to bring interest rates down.
I am well aware of the burden high interest rates have placed on certain
segments of the economy, and I am sympathetic to your concerns.
I believe that we will not achieve sustained lower interest
rates until we bring about a long-term reduction in inflation. Simply
creating more money now would worsen the problem, because inflationary
expectations would surge, leading to still higher interest rates.
Defeating inflation and restoring price stability, therefore, unavoidably requires restrained money growth.
I know this has been a difficult time for many people. As
our efforts, however, are combined with those of the Administration and
Congress -- Particularly if further reductions in government spending
and the Federal deficit can be achieved -- I believe that pressures
on credit markets and interest rates may be eased; and things will be
better for all of us in the future.
Sincerely,
DL:sl
#3604
cc: Dorothy Saunders (1)
Sandy Wolfe (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Roland B. Scro,ggins
President
Scroggins Realty
3721 West Northside Drive
P.O. Box 10118
Jackson, Mississippi 39206
Dear Mr. Scorggins:
Thank you for your letter regarding the effects of high interest
rates on the economy. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:ev jj
#4267
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Volfe
!Iorothy Saunders
1
October 28, 1981
The Honorable Albert Lee Smith
House of Representatives
Washington, D.C.
20515
Dear Mr. Smith:
Thank you for your letter of October 1 concerning the
treatment of real estate brokers under the revised Regulation Z
(Truth in Lending). You are concerned that real estate brokers
will be considered to be arranging credit in seller-financed
transactions and therefore required to give Truth in Lending disclosures.
The Board recently considered the issue of what
"arranging credit" means and has issued a proposal that deals
with determining what activities constitute arranging credit.
In the proposal (a copy of which is enclosed) the Board requests
comment on a number of possible factors that might be considered
in determining what it means to arrange credit. Some of these
factors include: involvement in developing or negotiating credit
terms and helping to complete credit documents; transmitting or
conveying the terms of the offer; procuring or soliciting a credit
extender; advising the credit extender or consumer about the
financing terms, and whether or not a fee is involved.
In the proposal the Board specifically requests comment
on whether real estate brokers who assist in seller financing
should be considered arrangers of credit and subject to Truth in
Lending disclosure responsibilities. As I am sure you are aware,
Senator Garn has introduced a bill, S. 1720, that would exclude
arrangers of credit from the Truth in Lending Act. This would
serve to relieve real estate brokers involved in seller-financed
transactions from disclosure responsibility under the Act.
We look forward to receiving any comments that you or
your constituents may have on the Board's proposal.
Sincerely,
MPE:CO:pjt (#V-283)
bcc: Maureen English
Mrs. Mallardi (2)
Enclosure
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(p.r. dtd. 10/20/81)
Sgaul th Volcker
October 28, 1981
Ms. Dee A, Smith, President
Dee Smith Company, Inc.
P.O. Box 6251
Greenville, South Carolina 2960(
Dear Mr. Smith:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is hapoenine
and I am syrpathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the econory have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
eserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in Inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
1 know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
se
g4495
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr, W. T. Sowell
Cooke Construction
225 So. Mathilda
Sunnyvale, California 94086
Dear Mr. Sowell:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hiller interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an imrovercent in inflation and interest rates before too long.
Sincerely,
:see
f4724
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Robert Speece Properties, Inc.
5227 Andrea Blvd.
P.O. Box 41748
Sacramento, California 95842
Dear Ladies and Gentlemen:
Thank you for your letter expressing your concern over the
problems high interest rates have caused you in your efforts to purchase a
home. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BF:evjj
04317
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 1981
Mr. William Tharp
Vice President
Rountree Cotton Co., Inc.
P.O. Box 1390
Las Cruces, New Mexico 88001
Dear Mr. Tharp:
Thank you for your letter regarding the effects of high interest
rates on the economy. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
Bnevij
#4313
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 19R1
4r. Ooe Thorne. President
Thorne ',1ea1 Estate and Financial
Services, Inc.
6802 36th "venue North
NInneapolis, Minnesota 55427
Dear 11r. Thorne:
Thank you for your letter and your expression of support.
In the face of !_.iroblems we both recognize, your words of encouragement
are particularly appreciated. It was thowhtful of you to take the
time to write.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Cincerely,
October 28, 1981
Mr. and Mrs. Rickey Travelstead
Dear Mr. and Mrs. Travelstead:
Thank you for your letter regarding the effect high interest rates
are having on young couples. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
substantial and long-lasting improvement in interest rates
a
However,
on bringing about a sustained reduction in Inflation. As we
depends
ultimately
we cannot rely on monetary restraint alone to control
maintained,
have long
and complemented by fiscal restraint. The
balanced
be
must
it
inflation;
Federal Government, huge by any measure,
the
of
s
requirement
borrowing
it more difficult for the private sector to
make
and
markets
strain financial
many and realized some essential
proposed
has
on
Administrati
borrow. The
on and the Congress in
the
of
Administrati
success
The
cuts in public spending.
on the support and
depends
Federal
deficit
the
ultimately
reducing spending and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
ISF:evjj
#4510
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 1981
Mr. Andrew Trupin
Dear Mr. Trupin:
Thank you for your letter. I am aware of the problems high interest
rates have caused, and I understand the concerns that prompted you to write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
3F:ev jj
"3935
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Jon Villers
Dear Mr. Villers:
Thank you for your letter regarding the effects of high interest
rates on the economy. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
tlFrev jj
#4284
CC:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 28, 1981
"T. *Allier R. 'Lett, President
flaywood Development Group
500 Newport Center Prive - Suite 600
,ewport peach, California 92660
Dear Mr. Watt:
Thank you for your letter regarding the effect high interest
rates have had on you and other builders. I understand what is harpenine
and I AM sympathetic to your concerns.
The current level of interest rates is undoubtedly havinn a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands corbined
with a large Federal deficit at a time when the Federal eserve must
mederate the growth of money in order to reduce inflation. If the Federal
eserve were to try to lower interest rates by expandine the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a telt abstract for husinesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
ln ierlrovement in inflation and interest rates before too lone.
Sincerely,
JF:sep
04424
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
rttober 23, 1981
r. Peter Vander Wielen, President
Affordable Builders, Inc.
11 Hilltop Court
Appleton, '41sconsin 54911
9ear r, ie1en:
interest
Thank you for your letter regarding the effects high
stand what is happening
rates haide had on you and other builders. I under
and I am syrpathetic to your concerns.
g a
The current level of interest rates is undoubtedly havin other
sore
while
tries
indus
particularly harsh impact on credit-sensitive
ected. Current interest
sectors of the economy have been relatively unaff
credit demands combined
te
priva
rates, however, are a reflection of strong
al Tleserve must
Feder
with a laroe Federal deficit at a time when the
tion. If the Federal
infla
e
moderate the growth of money in order to reduc
the money supply
ding
expan
by
Reserve were to try to lower interest rates
inflationary
in
ase
incre
too aggressively, I are convinced the resultant rates. The only solution
est
expectations would lead to even higher inter
e the Federal deficit.
I see in the short run is further action to reduc
and
I knce.4 this may sound a bit abstract for businesses t markets,
credi
in
es
chanc
Individuals who are particularly vulnerable to
ing some of these basic
however, I do not believe there is any way of avoid
can all look forward to
we
issues. At any rate, it is my fervent hope that
e too long.
befor
an imnrovetekent in inflation and interest rates
Sincerely,
3
(/
%
BF:sep
04357
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Charles F. Wirth, Jr.
Dear Mr. Wirth:
Thank you for your further letter. I am aware of the problems high
interest rates have caused, and I understand the concerns that prompted you to
write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
ShirtII
13526
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 28, 1981
Mr. Charles Zehren
Dear Mr. Zehren:
Thank you for your letter regarding the effects of high interest
rates on the economy. I understand the concerns that prompted your message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
BEtevjj
#4304
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Oorothy Saunders
October 27, 1981
Mt. Mary L. ilexander
Dear Ms. Alexander:
Thanks for sending me your letter regardin
g the effects high
interest rates are having on home buyers and
sellers. I understand what is
happening and I an sympathetic to your
concerns.
The current level of interest rates is undo
ubtedly havine a
particularly harsh impact on housing and othe
r credit-sensitive industries
while some other sectors of the economy have been
relatively unaffected.
Current interest rates, however, are a refl
ection of strong private credit
demands calbined with a large Federal defi
cit at a time when the Federal
Reserve must moderate the growth of money
in order to reduce inflation.
If the Federal Reserve were to try to lowe
r
the mpney supply too aggressively, I am convinterest rates by expanding
inced the resultant increase
In inflationary expectations would lead to
even hioher interest rates. The
only solution I see in the short run is furt
her action to reduce the
Federal deficit.
I know this may sound a bit abstract
individuals who are particularly vulnerable to for businesses and
changes in credit markets,
however, I do not believe there is any way
of avoidinc some of these basic
issues. At any rate, it is my fervent hope
that we can all look forward to
an improvement in inflation and interest rates
before too long.
Sincerely,
T:scT
4421
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ictober 27, 1981
Mr. Paul Allen
Dear Mr. Wien:
Thanks for sending me your letter regarding the effects high
Interest rates arehhaving on hone buyers and sellers. I understand what is
happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a laroe Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 27, 191
Mr. C. C. Anthes, Jr.
President
Bonded Noires, Inc.
2501 George Dieter Boulevard
El Paso, Texas 79936
Dear Mr. Anthes:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happening and I mm syrrathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh irnact on housine and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
derands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sere of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an im/rverent in inflation and interest rates before too Mfr.
Sincerely,
F:sep
.44.3•14)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Charles R. Asplof
Dear Mr. Asplof:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the hest hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
tiNev jj
#4244
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
rttober 27, 1981
Ms. Debby S. Aycock
Dear Ps. Aycock:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happenino and I am symeathetic to your concerns.
The current level of interest rates is undoubtedly havine e
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strnne private credit
demands combined with a large Federal deficit at a time when the Federal
T).eserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, T ar convinced the resultant increase
in inflationary expectations would lead to even hipher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit merkets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an imoroyerent in inflation and interest rates before too long.
Sincerely,
--
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 19S1
Ms. Betty J. Baker, Realtor
Century 21/Baker Real Estate, Inc.
7919-A South Dixie Highway
Palm Coast Plaza
',lest Palm death, Florida 33405
Dear Ms, Baker:
Thanks for sending me your letter regarding the effects high
interest rates are having on home buyers and sellers. I understand what is
happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strone private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by exnandinq
the money supply too aggressively. I am convinced the resultant increase
In inflationary expectations would lead to even hiaher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
F:sei
1,4483
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
7.
r. !es Barton
3arton Construction Company
1155 West 4575 South
Riverdale, Utah 84403
Iear Mr. Barton:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havinn a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at P time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too angressively, I am convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. 4t any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
cAncerely,
BE:sep
#41131
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Gary Bayless
lea,. Mr. Bayless:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other creel t-sensi ti ve industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong nrivate credit
demands combined with a large Federal deficit at a tine when the Federal
Reserve must trnderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
Otep
0113
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0
October 27, 1981
"Ars. Thomas A. Beck
Dear Mrs. Beck:
I have received your letter expressing disagreement with the
of the Federal Reserve. I can understand your concern, but I
policies
monetary
our policy of monetary restraint would ultimately harm
abandoning
believe
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
;3F:evjj
V 4 368
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
fir. Joh Bell
Bell Motor, Inc.
325 N. Santa Fe - P.O. Box 386
Salina, Kansas 67401
-;ear Mr. Bell:
Thank you for your letter renarding the effects of high interest
rates on your automobile deilership. I understand what is happeninr and
I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a tine when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hipher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
Issues, At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too low?.
Sincerely,
aFtsop
#4443
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mt. Joyce S. Bradley
near Mt. 3radley:
Thank you for your letter asking that I "lower the interest rates".
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simoly creating more money
now would worsen the oroblem, because inflationary expectations would
surge, leading to still higher interest rates. Restorino price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government snendino and the
federal deficit will help to ease pressures on interest rates and credit
markets. We know this has been a difficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
2F:seo
04513
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
:v1r. Paul Brenn
Dear Mr. Brenns
Thank you for your letter to the Federal Reserve regarding a
return to the gold standard.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
BF:evil
S.O. # ;7
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. F. B. Broadhurst, Jr.
Presi dent
Broadhurst Development Corapany, Inc
6685 Falls of euse !),oad, Suite 20/3
Raleigh, North Carolina 27609
leer Mr. 3rPadhurst:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is haopenine
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I an convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding yule of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too lone*
Sincerely,
F:sep
#4504
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
rIctober 27, 19P1
Ms. Pat Callahan
Creative Homes of Goldsboro, Inc.
P.O. Box 10428
Goldsboro, Aorth Carolina 27532
Dear !''s. Callahan:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having
particularly harsh irrpact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of straw.: Private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supnly too agoressively, I am convinced the resultant increase
in inflationary exnectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
any rate, it is my fervent hope that we can all look forward to
issues.
an improvement in inflation and interest rates before too long.
Sincerely,
fr:sep
04356
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
4r. Jesse Chambers
Jesse Chambers ione, Inc.
3208 Eagle Lane
gethany, Oklahma 7300g
Dear 7•1r, Chambers:
Thanks for sendine me your postcard regardine the effects of hieh
interest rates on the housing industry. I understand what is happening and
I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having A
particularly harsh impact on hOusing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strono orivate credit
demands combined with a large Federal deficit at a time when the Federal
Reserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by exnanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit,
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an irprovernent in inflation and interest rates before too lone.
ncerely,
,:iFtseo
#4432
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Simon Chavez, Manager
White's Home and Auto
300 Granado
Tularosa, New Mexico 88352
Dear Mr. Chavez:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BFsev jj
114462
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. qilliam J. Cillessen, President
8 A M Cillessen Construction Co., Inc.
1205 Troy King Road
Farmington, Uew Mexico 87401
Dear Mr. Cillessen:
Thank you for your letter regarding the effects of high interest
rates on you and other members of the small business community. I understand
what is happening and I am symnathetic to your concerns.
The current level of interest rates is undoubtedly havina P
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strono private credit demands combined
with a lame Federal deficit at a time when the Federal leserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by exnandinp the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead tn even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avnidino some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
F:seo
14316
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Harold L. Cobb
Cobb and Co., Realtors
4028C Plantation Drive
Hermitage, Tennessee 37076
Dear Mr. Cobb:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:evil
04338
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Bruce Coder
Management Systems Company
3185 "0" Airway Avenue
Costa Mesa, California 92626
Dear Mr. Coder:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
ESF:evjj
#4318
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I
October 27, 1981
Mr. James C. Coffin, President
C-Y Development Co.
222 E. Olive Avenue - Suite 5
Redlands, California 92373
Dear Mr. Coffin:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth In money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
Fsev jj
#4319
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Dave E. Cornwall
President
Custom Interiors, Inc.
14525 N. 79th Street
Suite E.
Scottsdale, Arizona 85260
Dear Mr. Cornwall:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:evjj
#4236
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Victor W. Cory
Dear Mr. Cory:
Thank you for your letter and accompanying editorial regarding a
return to the gold standard, as well as your other comments which are not quite
deserving of a rebuttal.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
BFlevjj
*399/
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Jack Crawford
Dear Mr. Crawford:
Thank you for your letter supporting a return to the gold-backed
dollar.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
BF:ev jj
#2997
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0ctnber 27, 1181
71r. Dick Crowley
Dear Mr. Crowley:
Thank you for your letter asking that I "lower the interest rates".
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surre, leading to still higher interest rates. estoring price stability
unavoidably requires restrained monetary 3nd credit prowth.
As our efforts and those of the Congress and the AdOinistration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in eovernment spendine and the
federal deficit will help to ease pressures on interest rates and credit
markets. 1,1e know this has been a difficult period for many people, and it
is our fervent wish that things will he better for all of us in the future.
Thank you for writing.
Sincerely,
sF:sep
014)6"
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
i)ctober 27, 1981
mrs. Harry Crowley
Co-owner and Manager
H & A r'en's Store
117 'forth Main
Lovington, ew Mexico 88260
!)ear mrs. Crowley:
Thank you for your letter regarding the effects of high interest
rates on you and other members of the small business community. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having A
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected, Current intcrest
rates, however, are a reflection of strong, nrivate credit derands combined
with a large Federal deficit at a tire when the Federal Reserve must
roderate the Prowth of (coney in order tc reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I an convinced the resultant increase in inflationary
expectations would load to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however. I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
idold
Sincerely,
'F:see
04319
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Kenneth Davis. President
North Palm domes, Inc.
P.O. Box 886
Lake Worth, Florida 33460
Dear Mr. Davis:
Thank you for your letter askino that I "lower the interest rates".
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leadinc to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hone is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will heln to ease pressures on interest rates and credit
rarkets. We know this has been a difficult neriod for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writinn.
Sincerely,
bF:sep
44471
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 27, 1981
Mr. and Mrs. H. C. Day
Dear Mr. and Mrs. Day:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
!3F:ev jj
#4367
https://fraser.stlouisfed.org
Federal
Reserve Bank of St. Louis
0
October 27, 1981
Mr. A. H. Deitrick
RE/MAX of Liberty, Inc.
949 Liberty Drive
Liberty, Missouri 64068
9ear Mr. 9eitrick:
Thank you for your letter regarding the effects of high interest
rates on you and other members of the small business community. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands corbined
with a large Federal deficit at a tire when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
eeserve were to try to lower interest rates by expandine the money suPelY
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I knew this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
rF:sep
04415
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
9ctober 27, 1981
'ot. Alice Denning
Dennine Haworth Realty, Inc.
1801 South Anth
Salina, Kansas 67401
Dear Ms. Denning:
Thanks for sending me your letter regarding the effects
interest rates are having on hone buyers and sellers. I understandbirth
what is
happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on housing and other credit-sensitive indust
while some other sectors of the economy have been relatively unaffe ries
cted.
Current interest rates, however, are a reflection of strong privat
credit
e
demands combined with a layer Federal deficit at a time when the
Federal
Reserve must moderate the growth of money in order to reduce
inflat
If the Federal Reserve were to try to lower interest rates by expandion.
ing
the money supply too aggressively, I am convinced the resultant increa
in inflationary expectations would lead to even higher interest rates.se
The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credi
t markets,
however, I do not believe there is any way of avoiding save
of these basic
Issues. ft any rate, it is my fervent hope that we can all look forwar
d to
an improvement in inflation and interest rates before too
long.
Sincerely,
,4441
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Ms. Dorothy Dennisan
Dear Ms. Dennisan:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:evjj
#4464
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
_W
October 27, 1981
Mr. Edward G. Detzel
E. G. Detzel Realtor
5522 C.olerain Avenue
Cincinnati, Ohio 45239
Dear Vir. Detzel:
I have received your letter expressing disagreement with
the
monetary policies of the Federal Reserve. I can understand your
concern, but I
believe abandoning our policy of monetary restraint would ultima
tely harm
rather than help businesses and individuals vulnerable to chang
es in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It
is important,
however, that you recognize what the consequences would be if we
attempted
to lower interest rates by allowing money and credit to
grow too rapidly.
Excessive growth in money would adversely affect inflation and inflat
ionary
expectations, a principal ingredient of high interest rates. When lender
s expect
continued high inflation, they are naturally reluctant to commit funds
without
being compensated for the expected declining value of the dollar
s they will
receive in payment. Thus the result of an excessive expansion
in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal defici
t at a time
when the Federal Reserve must moderate the growth
in money and credit to
bring inflation under control. Your suggestion, though well intend
ed, would
serve to aggravate inflation, eventually causing still higher intere
st rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attain
ing
stable prices, lower interest rates and a healthier economy for
all of us. As
these policies take hold, it is my fervent hope and belief that we can
all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
8Fsev I)
#4339
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
=ktober 27, 1981
Mr. James L. Donaldson
r 7 !J Development Company
. . Box 69
Macon, Georgia 31298
Rear Mr. Donaldson:
Thanks for sending me your postcard expressing your dismay over
the effect high interest rates have had on yourhhousing sales. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh irpact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I de not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
2,F:seT
;;4251
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'ctober 27, 1981
Is, Linda L. Eberwein
Millwood 7ealty, Inc.
1497 E. Iron
lalina, Kansas 67401
Dear ?Is. Ebemein:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I unders
tand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
oarticularly harsh impact on housine and other credit—sensitive indust
ries
while sore other sectors of the ecnnomy have been relatively
unaffected.
Current interest rates, however, are a reflection of strong privat
demands corbined with a large Federal deficit at a tire when the e credit
Federal
Reserve rust moderate the erowth of money in order to reduce inflat
ion.
If the Federal fieserve were to try to lower interest rates by exnand
ine
the money supply too aneressively, I an convinced the resultant increa
se
In inflationary expectations would lead to even hicher interest rates.
The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to channes in credit market
s,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward
to
an imnrovevent in inflation and interest rates before too lone.
sincerely,
14447
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
AL.
October 27, 1981
Mr. Carl H. Ellis
Dear Mr. Ellis:
Thank you for your letter and article to the Federal Reserve
regarding a return to the gold standard.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
13F:ev jj
S.O. 0681
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Charles E. Enfield
Enfield Electric h Construction Co.
7830 Agate Drive, S.W.
Tacoma, '.4ashington 98498
Oear Me. Enfield:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is hapnenine
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
narticularly harsh irpact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
Ath a large Federal deficit at a tine when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
aeserve were to try to lower interest rates by expanding the money supply
too ageressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
:)F:seo
#4517
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Tolle Epps, CLU
Dear Mr. Epps:
Thank you for your letter suggesting that a return to the gold
standard would stabilize the economy.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
BF:evjj
2747
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Virgil P. Erickson
Century 21/Alexander-Hunter Co.
320 Third Street
Farmington, nnesota 55024
Dear Mr. Erickson:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
,F:evjj
4068
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Ms. 1. Farley
Dear Ms. Farley:
Thank you for your letter regarding the effects of high interest
rates on you and other members of the small business community. I understand
whet is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandine the money supply
too aggressively. I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a hit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvevent in inflation and interest rates before too long.
Sincerely,
1;F:sep
04422
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1181
!r. Charles P. Franz, Manager
lton (.1. Schumann Inc.
1160 jest Davenport Street
'ihinelander, 4fsconsin 54501
Dear Mr. Franz:
Thank you for your letter regarding, the effects high inter
est
rates hade had on you and other builders. I understand what
is happenine
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while
sectors cf the econory have teen relatively unaffected. Curre some other
rates, however, are a reflection of strong private credit demannt interest
ds combined
orith a large Federal deficit at a time when the Feder
al Reserve must
reederate the orowth of money in order to reduce inflation.
If the
rseserve were to try to lower interest rates by exoandine the money Federal
too aceressively, I am convinced the resultant increase in infla suoply
tionary
expectations would lead to even hieher interest rates. The
only
solution
I see in the short run is further action to reduce the Feder
al deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to chances in credi
t
however, I do not believe there is any way of avoidinn sore of markets,
these
basic
Issues. At any rate, it is my fervent hope that we can all
forwa
look
rd to
an improvement in inflation and interest rates before
too low.
Sincerely,
RFtsep
14219
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Ramon Garcia
P.O. Box 914
Socorro, New Mexico 87801
Dear Mr. Garcia:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:ev ji
#4420
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 19P1
r. Henry H. Goldberg, President
The Artery Organization, Inc.
5550 Friendship Boulevard, f550
Chevy Chase, Maryland 20315
Dear Mr, Goldberc:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happenine
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore, other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong nrivate credit demands cembined
with a large Federal deficit at a time when the Federal Reserve must
roderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aqoressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
qncerely,
ff:sep
f4234
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
7)ctober 27, Fri
Ms. Janean Grissom
')ear Ms. Grissom:
Thank you for your letter regarding the problems hien interest
rates have caused you in the operation of your ranch. I understand what
is happening and I am syrpathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh irpact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strone private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I an convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
to
issues. At any rate, it is my fervent hope that we can all look forward
too
long.
an imnroverent in inflation and interest rates before
Sincerely,
,iFssep
#4261
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Ms. Betty Hall
Dear Ms. Hall:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:evjj
#4258
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Lee K. Hanson
Lee K. Hanson Contr, Inc.
P.O. Cox 433
Icy, Utah 34067
Mr,
Dear Mr. Hanson:
Thank you for your letter regarding the effects high interest
rites have had on you and other builders. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
7:eserve were to try to lower interest rates by expandinn the money supply
too aggressively. I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that e can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
6F:sep
#4232
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
r
October 27, 1981
rs. Joan C. Hargrave, R..
Executive Director
Vencedor, Incorporated
516 Juarez
Carlsbad, 4csod Mexico 88220
T)ear Ms. Hargrave:
Thank you for your letter regarding the effects of high interest
rates on your husband's real estate business. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal !).eserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this ray sound a bit abstract for businesses and
individuals who are Particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an Improvement in inflation and interest rates before too lonn.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
cAncerely,
October 27, 1981
Mr. J. L. Harper
Harper Agency
738 ..lest Mai n-Upstai rs
P.D. Dox 236
Farmington, lew Mexico 87401
Dear Mr. Harper:
Thank you for your letter regarding the effects of high interest
rates on you and other members of the small business community. I understand
what is happening and I an sympathetic te your concerns.
The current level of interest rates is undoubtedly having a
narticularly harsh impact on credit-sensitive industries while some other
sectors of the econory have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit derands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the crowth of money in order to reduce inflation. If the Federal
P.eserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding snre of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improverrent in inflation and interest rates before too long.
Sincerely,
3F:sep
`.14226
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 27, 1981
Mrs. John Harvey
Dear Mrs. Harvey:
Thank you for your letter to the Federal Reserve regarding a
return to the gold standard.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
BFIevij
5.0. #
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
f
October 27, 1981
Mr. Lee O. aworth, President
Lee Haworth Construction Co., Inc.
Kraft Manor
1301 South Ninth
Salina, Kansas 67401
Oear Mr. Haworth:
Thank you for your letter asking that I "lower the interest rates".
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creatine more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit orcwth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in governrent spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. '-!ta know this has been a di -fficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
;F:ser
41;1:1r
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
rttober 27, 1921
me. Ilesley Hays, President
Faxon Development Corpany
6056 ?eseurces Drive
Memphis, Tennessee 38134
„)ear Mr. Hays:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happenino
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
qederate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to charms in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
IF:sep
!:4111;
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mrs. Marion R. Fiernan
Pre-Fit Door, Inc.
6192 Cimarron Trail
Flint, Michigan 48504
Dear Mrs. Herman:
Thank you for your letter retarding the effects of high interest
rates on builders. I understand what is happening and I am sympathetic to
your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strono private credit demands combined
with a laroe Federal deficit at a time when the Federal Reserve must
vaderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandino the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long,
sincerely,
:ser
43
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
%titer 27, 1981
Mr. William F. milker
Aew World Homes, Inc.
3705 Pebblewood Place
Fort Vayne, Indiana 46804
Dear
Milker:
Thank you for your letter statino that I rust work to lower
interest rates implediately.
The plain fact, hcwever„ is that we will not he able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the nroblem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably recuires restrained monetary and credit clrowth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
Narkets, e know this has been a difficult period for many people, and it
is our fervent wish that things will he better for all of us in the future.
Thank you for writing.
Sincerely,
F:cer,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
•r1r. Arthur C. Holden, FAIA
Dear Mr. Holden:
Thank you for your letter and accompanying correspondence
concerning a return to the gold-backed dollar.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
BF:evjj
#3666
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 27, 1981
Mr. J. C. Hoover, Jr.
Dear Mr. Hoover:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
23F:evjj
#4294
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, lqfll
Ms. Patricia R. Hunt
Realtor-Assaciate
Plastridge, Inc.
PO. Drawer 730
820 lorth Federal Highway
Delray Beach, Florida 33444
Dear Ms. Hunt:
Thanks for sending me your letter expressinc. your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
lrtsep
443(
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Ronald Johansen
President
Dakota County Board of Realtors
3908 Sibley Memorial Highway
Eagan, Minnesota 55122
Dear Mr. Johansen:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:evjj
04473
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'I)ctober 27, 1981
Mr. and Mrs. Rudolph Kasper
Dear Mr. and Mrs. Kasper:
Thank you for your letter regarding the effects of high interest
rates on you and other members of the srall business connunity. I understand
what is haPpening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong Private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
rnderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by exnandino the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. Pt any rate, it is ray fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
insep
#4412
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 19F1
tir. Chuck Kilgariff
Century 21/Wilson Realty
2401 South 9th
Salina, Kansas 67401
Dear Mr. Kiloariff:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the crowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
In inflationary expectations would lead to even hicher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a
Sincerely,
1
ctober 27. 1981
Mr. John Kish, Jr.
John Kish Construction Co., Inc.
4421 M.'J. 65th Terrace
Gainesville, Florida 32601
Dear Mr. Kish:
Thank you for your letter and your "key" to lower interest rates.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge. leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Aallinistration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. 'sie know this has been a difficult period for many people, and it
Is our fervent wish that things will be better for all of us in the future.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Thank you for writing.
Sincerely,
October 27, 1981
Mr. Herb Kroeger
Plant Manager
DeWils Industries, Inc.
6307 N.E. 127th Avenue
Vancouver, Washington 98662
Dear Mr. Kroeger:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies -take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:evil
#4030
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
%tober 27, 1981
Lake Area Builders, Inc.
Dear Sirs:
Thanks for sendina me your letter expressing your dismay over the
effect high interest rates have had on your housing siles. I understand
what is happening and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a tire when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively. I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lona.
Sincerely,
#409
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
nctober 27, 1911
Mt. Mary Ann Langston
Dear Ms. Langston:
Thank you for your letter and your "key" to lowering interest
rates.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we hring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Adrinistration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. !:Je know this has heen a difficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
J':sen
41,2C1
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
A
October 27, 1931
Ir. Richard S. Lee
Energy Savers, Inc.
223 By-Pass - P.O. Box 1111
Easley, South Carolina 22640
)ear "r. Lee:
Thank you for your letter regarding the effects of high interest
rats on you and other members of the small business community. I understand
''hat is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong nrivate credit demands corbined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I de not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely.
F:sop
'4,Y14
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. William C. Leigh
Glenwood Home Corporation
P.O. Box 7002
The Woodlands, Texas 77380
Dear Mr. Leigh:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
Bnevjj
#4243
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Ms. Diana L. Lindgren, President
Country West Realty, Inc.
12809 Main Street
P.O. Box 245
Rogers, Minnesota 55374
Dear Ms. Lindgren:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BRevii
#4225
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. G. L. Lowe
Aledo Real Estate
P.O. Box 395
701 Farm Road 5 N
Aledo, Texas 76008
Dear Mr. Lowe:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
3Fmv jj
#4360
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mrs. Terry McCurdy
near Mrs. McCurdy:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is hanpenine
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a tine when the Federal
Reserve must moderate the orowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary exnectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal defici t.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidino sore of these basic
issues. At any rate, it is my fervent hope that we can all look forwe.rd to
an improvement in inflation and interest rates before too long.
Sincerely,
r:ser:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
f)ctober 27, 19F1
r. C. Dale McGrew II
Pre.si dent
Adams-McGrew Homes, Inc.
424 North Gilbert Street
Danville, Illinois 61832
Dear Mr. ticGrew:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housinn sales. I understand
what is happening and Iam sympathetic to your concerns.
The current level of interest rates is undoubtedly havino
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
current interest rates, however, are a reflection of strong nrivate credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates hy exnandine
the money supply too aggressively, I am convinced the resultant increase
in inflationary exnectations would lead to even hither interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
Issues, At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 27, 1981
Mr. John A. Maddox, Consultant
Salina Sand Company
n.r1, Box 206
Salina, Kansas 67401
')ear Mr. Maddox:
Thank you for your letter askina that I "lower the interest rates".
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leadina to still higher interest rates. 7 est°ri n q price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Conarnss and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in noyernment spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. '4e know this has been a difficult period for many people, and it
Is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
EF:sep
04478
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1181
Mr. Stanley A. Malkoff
StanJim Company
5437 Mahoning Avenue
Youngstown, Ohio 44515
Dear Mr. Malkoff:
Thanks for sending me your letter regarding the effects of high
Interest rates on the housing industry. I understand what is happenine
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housino and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong Private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too angressively, I an convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 27, 1981
Mr. James J. Miland
Dear Mr. Miland:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
for certain segments of the economy. It is important,
problems
serious
recognize what the consequences would be if we attempted
you
however, that
by allowing money and credit to grow too rapidly.
rates
to lower interest
money
would adversely affect inflation and inflationary
in
Excessive growth
of high interest rates. When lenders expect
ingredient
principal
expectations, a
are
reluctant to commit funds without
they
naturally
inflation,
continued high
value of the dollars they will
the
declining
expected
being compensated for
expansion in the money
the
of
excessive
an
result
Thus
receive in payment.
lower
interest
rates.
not
supply would be higher
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
arsevjf
#3976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1
nctober 27, 1981
Mr. Terrance Mish
Dear Mr, Mish:
Thank you for your letter, and those of your associates, lessrs.
Anderson and Babbitt, regarding the effects high interest rates have had
on the housing related engineering industry. I understand what is happening
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly havinn a
riarticularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a tine when the Federal eserve must
moderate the gmwth of money in order to reduce inflation. If the Federal
nteserve were to try to lower interest rates by expandino the money supply
too aogressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanties in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lona.
"zincerely,
ahsep
#433C
$4340
#4342
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Ir. Tad S. Mizwa, Publisher
Horseman
5314 'dingle Road
Houston, Texas 77092
Dear Mr. Mizwa:
Thank you for your letter asking that I "lower the interest rates".
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simoly creatine more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Connress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. We know this has been a difficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
7T:see
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Roger Monteyne
Certified Public Accountant
2283 W. Huntington Avenue
Anaheim, California 92801
Dear Mr. Monteyne:
Thank you for your letter to the Federal Reserve regarding a
return to the gold standard.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
etFlevij
S.O. #680
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ctober 27, 1981
Ms. Jo Ann morgan
P.1. Box 731
Hurst, Texas 76953
3ear Is. Morgan:
Thank you for your letter and your "key" to lower interest rates.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creatine more money
now would worsen the problem, because inflationary exPectations would
surne, leading to still hioher interest rates. f4astorinn price stability
unavoidably requires restrained monetary and credit orowth.
As our efforts and those of the Congress and the ,Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. ¶le know this has been a difficult period for many people, and it
is our fervent wish that things will he better for all of us in the future.
Thank you for writing.
Sincerely,
°IF:sep
#4515
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. William O'Brien
Dear Mr. O'Brien:
Thank you for your letter to the Federal Reserve regarding a
return to the gold standard.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
F:ev jj
5.0. # 679
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
liMb.
October 27, 1981
Mr. Ailliam S. O'Donnell
Managing Partner
Suburban Homes Realty
730 Little York Road
Houston, Texas 77076
Jeer Mr. O'Donnell:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I an convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look ftirward to
an improlerent in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 27, 19RI
Mr. Jim Ondov
P.3. Box 6102
Minneapolis, Minnesota
55496
Dear Mr. ondov:
Thank you for your letter regarding the problems high interest
rates have caused you in your attempts to sell your constructed apartrent
buildings. I understand what is happening and I am sympathetic to your
concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
7-taderate the growth of money in order to reduce inflation. If the Federal
reserve were to try to lower interest rates by mending the money supply
too aggressively, I aro convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I cb not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
nsev
#4370
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Stanley Peaden
Stanley Peaden Builders, Inc.
Route 2, 3ox 521A
Greenville, 4orth Carolina 27834
Dear Mr. Peaden:
Thank you for your letter and your "key" to lower interest rates.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Sirply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still hitter interest rates. Restoring price stability
unavoidably requires restrained 'monetary Rnd credit orowth.
As our efforts and those of the Coneress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
rarkets. .1 4e know this has been a difficult period for many people, and it
is our fervent wish that thinps will he better for all of us in the future.
Thank you for writinn.
Sincerely,
#4327
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
F
October 27, 1981
Mr. 'Avid F. Phelon
Dear Mr. Phelon:
Thank you for your letter regarding the effects of high interest
rates on the small business community. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit derands combined
with a large Federal deficit at a time when the rederal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hioher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely.
Gits41P
'4399
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Robert D. Priest
Executive Vice President
Fredericksburg Area
Builders Association
P.O. Box 7027
Fredericksburg, Virginia 22404-7027
Dear Mr. Priest:
1 have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion In the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
3F:evjj
#4112
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Fred S. Razook
Dear 'Ar. Razook:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
3F:evji
fi 4433
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Regency I Real Estate
Dear Ladies and Gentlemen:
I have received your letters expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
3F:evjj
ti4312
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Adrian J. Roof
Century 21/Adrian Roof Realty
1401 Lone `ak Road
Paducah, Kentucky 42001
Dear Mr. Roof:
Thank you for your letter regarding the effects of high interest
rates on the housing and automobile industries. I understand what is
happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strona private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hiaher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
5F:ser
04508
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Petober 27, 1921
Mr. Dennis R. Rose
Dear Mr. Rose:
Thank you for your letter regarding the effects of high interest
rates on the housing and automobile industries. I understand what is
happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havinP a
particularly harsh irract on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit derands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandine the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hither interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this ray sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit riarkets,
however, I do not believe there is any way of avoidinp sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an irnrovement in inflation and interest rates before too long.
Fincerely,
517
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(Ictober 27, 19P1
Ms, Ramie Russell
Jay VI. Russell Construction Company
10300 Alamo Court
Ifichita, Kansas 67212
Dear Pis. Russell:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happenine and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have ..ieen relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
2,2serve must moderate the growth of money in order to reduce inflation.
If the Federal Peserve were to try to lower interest rates by expanding
the money supply too ageressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is riy fervent hone that we can all look forward to
an imoroverent in inflation and interest rates before too long.
Sincerely,
,Ftsep
14341
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0ctober 27,
19n1
!Ir. Carl !'4,. Sabatello, President
Sabatello Construction of Florida, Inc.
P.D. Box 12402
Lake Park, Florida 33403
Pear
Sabatello:
Thanks for sending me your letter expressing your disray over the
effect high interest rates have had on yourhhousing sales. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
7eserve must moderate the growth of money in order to reduce inflation.
if the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to chanoes in credit markets,
however, I Op not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates befnre too lono.
Sincerely,
3F:sep
#4309
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 19171
fir. V,enneth E. Scarbrough
Tallahassee Dui 1 ders eassoc.
211 Delta Court
Tallahassee, Florida 33303
Dear '!r. Scarbrough:
Thank you for your letter asking that I "lower the interest rates".
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustainea reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leadine to still higher interest rates. Restorinn once stability
unavoidably requires restrained tronetary and credit growth.
As our efforts and those of the Conaress and the Adrinistration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. We know this has been a difficult Period for many People, and it
Is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
sen
MST;
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
:
.4,;1471
.VINKr, •
77711r,
October 27, 19R1
Mrs. Kay Schtseacher
,lear Mrs. Schunather:
Thank you for your letter regardino the effects of high interest
rates on your in-law's automobile dealership. I understand what is happening
and I am symathetic to your concerns.
The current level of interest rates is undoubtedly havine
particularly harsh lippact on credit-sensitive industries while SOfile other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
raaderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by exnanding the money supply
too Repressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonc.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 27, 19P1
lir. Richard Scotti
Dear "r. Scotti:
Thank you for your letter regarding the effects of high interest
rates on the small business community. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sone other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands cortined
with a large Federal deficit at a tier when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
7eserve were to try to lower interest rates by expandine the money supply
too acoressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanoes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
,F:see
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Gary J. Sepsi
Royal Designer Hares, Inc.
10730 N. 56th Street
Temple Terrace, Florida 33617
Dear Mr. Sepsi:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happenine
and I ar sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh Impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong erlvate credit derands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidinn some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonq.
Sincerely,
SF:sep
f4215
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
and Mrs. Clarence E. Shoemaker
telt. "r. and Mrs. Shoemaker:
Thanks for sending me your letter regarding the effects high
interest rates are having on home buyers and sellers. I understand what is
Llanpeoing and I mil sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strone private credit
demands combined with a large Federal deficit at a tire when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aneressively, I ar convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
044 1)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 11P1
Mr. Dan G. Smith
Smith Realty of Lexington, Inc.
P.O. Box 384
Lexington, Aorth Carolina 27292
Dear Mr. Smith:
Thank you for your letter regarding the effects high interest
had on you and other builders. I understand what is happening
have
rates
to your concerns.
sympathetic
am
and I
The current level of interest rates is undoubtedly havino a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strono private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine sore of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before toe long.
Sincerely.
6F:sep
#4254
https://fraser.stlouisfed.org
MERIN"
Federal
Reserve Bank of St. Louis
October 27, 1981
Mr. Ken Smith
Ken Smith Homes
P.O. j- ox 4048
Irving, Texas 75061
)ear ?Ir. Smith:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the nrowth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandinn the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an imnrovement in inflation and interest rates before too long.
Sincerely.
F:In
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Clctober 27, 1981
Mr, Gene Spear, Broker
American Realty Company
109 Creekwood Drive
gowlino Green, Kentucky 42101
Dear Mr. Spear:
Thanks for sending me your letter regarding the effects 140
interest rates are having on home buyers and sellers. I understand what is
happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and nther credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary exoectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn.
Sincerely,
GC2sop
•4314
https://fraser.stlouisfed.org
Federal
O' Reserve Bank of St. Louis
44
October 27, 1981
Mr. Stephen Spitz
Dockside Village Building Corp.
R.D. 6, Atsion Road
Medford, lew Jersey 08055
Dear Mr. Spitz:
Thanks for sendino me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
Particularly harsh impact on housing and other credit-sensitive industries
4hile some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strono nrivate credit
demands cortined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aegressively, I am convinced the resultant increase
in inflationary exoectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely.
A711
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'ttober 27, 1031
r. Otis C. Stamps
`7.ecretary/Treasurer
Inject-O-Meter ttanufacturing
220 Thornton
Clovis, Aew Mexico 88101
Dear Mr. Stamps:
Thank you for your letter regarding the effects of high interest
rates on your agricultural business. I understand what is hanpening and I
ar sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
Particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a tire when the Federal Reserve rust
moderate the growth of money in order to reduce inflatien. If the Federal
Reserve were to try to lower interest rates by expandine the money supply
too aegressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanees in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 27, 1981
Mr. Wayne L. Stephenson
Branch Manager &
Realtor Associate
Grant, Realtors
11170 60th Street North
Stillwater, Minnesota 55082
Dear Mr. Stephenson:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
Bnevjj
1P4442
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Charles P. Stetson, President
Stetson Securities Corp.
P.O. Box 58
Southport, Connecticut 06490
Dear Mr. Stetson:
Thank you for your mailgram to the Federal Reserve regarding a
return to the gold standard.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will he a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
Bnevjj
S.O. #6$3
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
A
•
October 27, 1981
Ms. Alma Strackbein
P.O. Box 74
Pinos Altos, New Mexico 88053
Dear Ms. Strackbein:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and Individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
with the need to finance a large Federal deficit at a time
combined
credit,
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BFIev jj
4320
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Steouse & Company, Incorporated
Dear Sirs:
Thank you for your letter regarding the effects Mph interest
rates have had on you and other builders. I understand what is hanpeninc
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while spat? other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a tire when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Peserve were to try to lower interest rates by expandinn the money supply
too acoressively. I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chances in credit Inarkets.
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
F:see
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ictober 27, 1181
Mr. Leonard R. Strouse
)ear r, Strouse:
Thank you for your letter regarding the effects high interest
rates have had on you and other builders. I understand what is happenine
and I ern sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh irract on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands confined
telth a large Federal deficit at a tire when the Federal Reserve must
roderate the growth of money in order to reduce inflation. If the Federal
7.eserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before ton long.
Sincerely,
'3F:sep
14497
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Ms. Pat Taylor
Senior Vice President
First Interstate Bank
of Gallup
300 W. Aztec
Gallup, New Mexico 87301
Dear Ms. Taylor:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
1 believe our monetary policy, complemented by proper fiscal
Initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
13F:evjj
04229
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 191
Mr. Ronald 7, Taylor
Gate Wood ;2,uilders, Inc.
2502-A. 9ade hampton Boulevard
Greenville, South Carolina 29615
Dear 9r, Taylor:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh irnact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a tire when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1951
Mr. Royal P. Taylor
President
Amsterdam Savings Bank
11 Division Street
Amsterdam, New York
12010
Dear Mt. Taylor:
Thank you for your recent mailram concerning the
deregulatory actions of the DIDC.
I understand the concerns
which prompted you to write and I want to assure you that I
will bear them in mind at future meetings of the DIDC.
Sincerely,
NB:crl
#4490
October 27, 1921
Mr. J. D. Thomas
Dear Mr. Thomas:
Thank you for your letter regarding the effects high interest rates
have had on farTers and the small business community. I understand what is
happening and I an symomthetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh irpact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit derands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sone of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
https://fraser.stlouisfed.org
•
Federal Reserve Bank of St. Louis
•
October 27, 1981
October 27, 1981
Mr. Dennis James Tomczak
Dear Mr. Tomczak:
Thank you for your letter regarding the economy
and the defense of the country. I an glad you see the
need for a strong fight against inflation and that you
are concerned about the well being of the people. While
I am not entirely clear on your thinking concerning some
of the issues you raised. I appreciate your taking the
time to express your views.
Sincerely,
?Fisher/0c
CC: Sandy Wolfe (2)
Dorothy Saunders
I
.0
2ctober 27, 1981
Mr. Cree L. Timmer, Secretary
United Development Services, Inc.
400 Mills Avenue - Level 2
Mills Centre
0reenville, South Carolina 29605
Dear Mr. Turner:
Thanks for sendine me your letter regarding the effects ef high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on Musing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a laroe Federal deficit at A time when the Federal
Reserve must moderate the nrowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. rt any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 27, 1981
Mr. deal E. Turner
Neal Turner Development
P.G. Box 1239
Bowline Green, Kentucky 42101
Dear Mr. Turner:
Thank you for your letter and your "key" to lowering interest
rates.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the nroblem, because inflationary expectations would
surre, leadino to still hieher interest rates. Restorin( price stability
unavoidably requires restrainPd monetary and credit orowth.
As our efforts and those of the roneress and the Administration
to reduce inflation take hold, our hone is that we all can look forward to
lower interest rates. Certainly reductions in ooverneent snendine and the
federal deficit will help to ease pressures on interest rates and credit
markets. Ye know this has been a difficult period for many people, and it
Is our fervent wish that things will he better or all of us in the future.
Thank you for writine.
Sincerely,
3F:see
f4272
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
N.
•
October 27, 1981
Mr. Darrel L. Vandiviere
Dear Mr. Vandiviere:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
SF:evjj
, 4438
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27. 1981
Mr. R. F. Vick
Ristway Construction, Inc.
1210 S. '4aterview Drive
Inverness, rlorida 32650
Dear Mr. Vick:
Thank you for your letter reoardinn the effects high interest
rates have had on you and other builders. I understand what is happenine
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on credit-sensitive industries while some other
sectors of the econory have been relatively unaffected. Current interest
rates, however, are a reflection of stronn private credit demands combined
with a larne Federal deficit at a time when the Federal Reserve must
roderate the growth of money in order to reduce inflation. If the Federal
P.eserve were to try to lower interest rates by exPanding the money supply
too angressively, I ale convinced the resultant increase in infletionary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanees in credit markets.
however, I do not believe there is any tlay of avoidino sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lono.
Sincerely.
':sep
226
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Edward L. Viets
Dear Mr. Viets:
Thank you for your further correspondence concerning the goldbacked dollar.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
Sincerely,
BF:evjj
t3410
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 19E1
Mr. M. C. aldrip, President
Marvin Weldrip Realty Company
319 Atlanta Street, S.E.
!,larietta, Georgia 30060
Dear Mr. ualdrip:
Thanks for sendinr me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happening and I an syrnathetic to your concerns.
The current level of interest rates is undoubtedly having a
aarticularly harsh irnact on housing and other credit-sensitive industries
while soee other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
eserve rust moderate the growth of money in order to reduce inflation.
If the Federal eserve were to try to lower interest rates by expandine
the roney supply ton Regressively, I am convinced the resultant increase
in inflationary expectations would lead to even hirher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
T know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an imnrovement in inflation and interest rates before too long.
Sincerely,
ir:se
A40,11
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
!Ir. John B. Weber
John G. Weber Construction Corpany
2509 Regency Court
Sioux Falls, South Dakota 57103
Dear
1.., 4eber:
Thanks for sendino me your letter regarding the effects high
interest rates are having on home buyers and sellers. I understand what is
happening and I am sympethetic to your concerns.
The current level of interest rates is undoubtedly havino a
narticularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a tire when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an irproverent in inflation and interest rates before ton long.
Sincerely,
,1A,,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Robert Weibel, President
Rog's Concrete, Inc.
P.O. Box 623
Rhinelander, 'fisconsin 54501
Dear Mr. Weibel:
Thanks for sending me your letter recording the effects of high
interest rates on the housing industry. I understand what is happenine
and I an syrpathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong Private credit
demands combined with a lame Federal deficit at a tire when the Federal
Reserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even hinher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improver:mkt in inflation and interest rates before too lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
•
October 27, 1981
9r. 'iesley K. qhitehead
Century 21/"hitehead-Holliday
Realty, Inc.
5838 Joiner Drive
San Antonio, Texas 78238
Dear :Ir. qhitehead:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happenine and I an symnathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
4hile socie other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strono private credit
demands combined with a large Federal deficit at a time when the Federal
leserve must moderate the growth of money in order to reduce inflation.
If the Federal Peserve were to try to lower interest rates by expanding
the money supply too aggressively, I AM convinced the resultant increase
in inflationary expectations would lead to even hinher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. It any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
:fftsep
#4312
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(ctober 27, 1q81
Mr. Bill -1hiteside
Dear Mr. tlhiteside:
Thanks for sending me your letter expressing your dismay over the
effect high interest rates have had on your housing sales. I understand
what is happenine. and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh ir.Jpact on housing and other credit-sensitive industries
ihile some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands calbined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expending
the enney supply toe aegressively, I an convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit,
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 27, 1981
Mr. C. !Thitnacre
Dear 'Ir. Whitmore:
Thank you for your card regarding the effects of high interest
rates on you and other members of the small business cntartunity. I understand
what is happenino and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
Foderate the growth of money in order to reduce inflation. If the Federal
Teserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are Particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forgard to
an improvement in inflation and interest rates before too long.
Sincerely,
F:sey
942115
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Mr. Bill Wilkinson
Realtor, C.R.S.
Century 21
2298 South Military Trail
West Palm Beach, Florida 33406
Dear Mr. Wilkinson:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:evb
#4482
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
David i. ',liners Realty. Inc.
Dear Sirs:
Thanks for sending me your letters regarding the effects high
interest rates are having on home buyers and sellers. I understand what is
happenine and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Peserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expandine
the money supply too aggressively. I am convinced the resultant increase
in inflationary expectations would lead to even hinher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
neweepe, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely.
.F:see
4141‘/
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 27, 1981
Mr. Roby C. Willis
Willis 6uilders
Route 1, ilox 38E;
Fountain Inn, South Carolina
29644
Dear Mr. Willis:
Thank you for your letter asking that I "lower the interest rates".
The plain fact, however, is that we will not he able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
sure, leading to still hither interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
",s our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. ie know this has been a difficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
CF:seo
#44SS
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 1981
Is. Gladys Yokell, Office !lanager
United Development, Inc.
201 Chick Hampton Building
1 Chick Springs Road
Greenville, South Carolina 29609
Dear "s. Yokell:
Thanks for sending me your letter expressing your desmay over the
effect high interest rates have had on your housing sales. I understand
what is hanpening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong privete credit
demands combined with a large Federal deficit at a tire when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Peserve were to try to lower interest rates by exoandine
the money supply too aggressively, I an convinced the resultant increase
in inflationary expectations would lead to even hioher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. lt any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before, too lone.
Sincerely,
3F:set)
44216
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 27, 19n.
Mt. Peter W. Hughes
Legislative Counsel
American Association of
Retired Persons
National Retired Teachers
Association
1909 K Street, N.W.
Washington, D. C.
23049
Dear !tr. Hughes
I appreciate having the views on passbook rate ceilings
that you communicated on behalf of the American Association of
Retired Persons and the National Retired Teachers Association.
I want to assure you that it was with great regret that I decided
to vote against an increase in those ceilings at this time. / am
mindful of the need for added income on the part of many of our
older citizens, and I ea also persuaded of the benefits of moving
passbook ceilings toward market rates in the most expeditious manner
that is feasible.
In present circumstances, however, I am very much concerned
about the adverse impact that higher passbook rates would have on the
earnings of depository institutions. Indeed, I an persuaded that the
safety and soundness of some of these institutions would be severely
jeopardized. Accordingly, while I am convinced that passbook ceilings
should be kept under continuing review and raised at the earliest
opportunity, I believe that financial conditions militate against
such an action at this time.
Sincerely,
Paul A. Volcicer
NB:crl
I/4988
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Edward V. Regan
State Comptroller
270 Broadway
New York, New York 10007
Dear Mr. Regan:
Thank you for sending me a copy of your letter to Secretary
Regan regarding the subject of taxable bond options for state and local
governments. I appreciate your invitation to comment on it.
As you well know, the idea of the taxable bond option has been
discussed for a good many years now. As you note, the traditional arguments
in support of the proposal have been that it would enable states and
localities to tap a broader range of potential investors and would save
the federal government lost tax revenues. A key determinant of this last
point, of course, is the degree of federal subsidy and it is a little hard
to consider the issue in the abstract. Arguments against the proposal
have included technical questions about impacts on relative taxable and
tax-exempt bond rates and thus on the extent of possible savings, concerns
about the survival of the tax-exempt market, and concerns about a possible
progressive encroachment of the federal government on the financial freedom
of state and local units. The result has been something of a legislative
stalemate.
I think that the idea merits renewed consideration. I would
guess, however, that in the current environment of serious concern about
the dimensions of the federal deficit, the uncertain budgetary consequences
of such a program might be a significant impediment to enactment. Moreover,
I would doubt that any reasonable taxable bond option program would be
sufficient to overcome the current financial problems of states and
localities--problems that will only be solved when we do succeed in
reining in inflation and setting the economy back on a course of healthy
economic expansion.
Sincerely,
MJP:JZ--tn
(#3924)
bcc: Mr. Prell
Ms. Wing
Ms. Wolfe (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 2, 1981
Ms. i;obbie Allen, President
A
M Realty
4309 Montrose Boulevard
Houston, Texas 77006
Dear is. Allen:
Thanks for sendino me your letter regarding the effects of high
interest rates on home buyers and sellers. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aoeressively, I am convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution T see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
;F:sep
?4163
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Geoffrey T. Andron
Dear Mr. Andron:
Thank you for your recent letter to me, other members of the
Board and staff regarding the impact of the rapid growth in money market
mutual funus (4KMFs) on Ml-B. You pointed out that the utilization of
the check-writing feature of many MMMF accounts has understated the
effective growth of Ml-B during 1981 and your recommendation is that
the Federal Reserve adjust its policy targets to compensate for the
growing importance of MMMFs.
I agree that the evidence appears to suggest that the recent
sluggishness in the narrow, or Ml-B, definition of money thus far in 1981
has resulted from more intensive application of sophisticated cash
management techniques by firms and even individuals that permits a reduc;
tion in holdings of transactions balances relative to levels of spending
By
MMMFs undoubtedly have played an important role in this process.
contrast, the M2 and M3 definitions of money, which include MMMFs, are
growing at least as rapidly as they did last year.
is
Estimation of the magnitude of the effect of MMMFs on Ml-B
very difficult, however. Your calculation of the impact, using cash
items generated by MMMF checks, assumed that the total volume of checks
held
written on MMMF accounts was drawn on funds that would otherwise be
these
of
size
average
the
Given
.
accounts
--even temporarily--in Ml-B
checks and their relatively infrequent use, it is likely that a portion
would
of these funds represent transfers between non-money assets that
in the
example,
For
event.
any
in
not have flowed through Ml-B accounts
rm
short-te
ive
alternat
in
hela
been
absence of MMMFs, funds might have
nonother
to
bills
from
s
investments, say Treasury bills and transfer
money assets, such as stocks or bonds, would have the same effect on
measured Ml-B as use of a mutual fund check to purchase these assets.
In addition, even if the issuers of MMMF checks would otherwise have
used checks drawn on Ml-B accounts, some issuers likely would be
sophisticated cash managers, waiting to fund these accounts until
average,
just before the checks were to clear is generally less, on
than the 4 to 14 days you cited.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
V_
Mr. Geoffrey T. Andron
-- 2
With these caveats in mind, I agree that MMMis have reduced the
demand for Ml-B balances, in part by substituting directly for transactions
balances, as you point out, but also by providing a highly liquid alternative
to these balances. In this period of rapid financial innovation, growth in
the monetary aggregates must be interpreted carefully. No single measure
of the monetary aggregates can be relied upon to impart complete information on the stance of monetary policy. In recognition of this, the Federal
Open Market Committee in its mid-year review indicated its awareness of
the changing relationship between the growth of Ml-B and the broader
aggregates arising from, among other things, flows of funds into MMMFs.
These issues are under close and constant scrutiny and I can assure you
that, as you suggest, any possible change in the transactions properties
of MMMFs will be monitored closely.
Thank you for taking the time to share your insights with me.
Sincerely,
SAtkinson/DLKohn:tn
#4255
cc: Mi. Kohn
Ms;. Atkinson
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Ms. Sherry1 K. Andrus
near mt. Andrus:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happeninn and I an
sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on hnusine and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strnnp private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chances in credit markets.
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
iF:sep
14058
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
FM6.
October 26, 1981
Is. Jane 11rmstrono
Jim 'qest, Dealtors
11902 Jones Road
Houston, Texas 77070
Dear 'IS. rsrmstrono:
Thanks for sending me your letter regarding the effects of high
Interest rates on the housing industry. I understand what is hapoenino
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh imact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
'..eserve must moderate the orowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aogressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoidinn some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone,
Sincerely.
3Ftser)
042811
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Chuck Avery, President
Building Industry Association
of Central California, Inc.
1401 F Street
Modesto, California 95354
Dear Mr. Avery:
Thank you for your letter urging that I "develop a more equitable
program to encourage productivity, discourage use of credit for unproductive
programs, and lower interest rates." I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined with
a large Federal deficit at a time when the Federal Reserve must moderate the
growth of money in order to reduce inflation. If the Federal Reserve were to
try to lower interest rates by expanding the money supply too aggressively, I am
convinced the resultant increase in inflationary expectations would lead to even
higher interest rates. The only solution I see in the short run is further action
to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
13F:eyjj
#3113
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
florothy Saunders
•
October 26, 19R1
Mr. Terry Baecker
lee. Mr. aecker:
Thanks for sendine me your letter regarding the effects of hieh
interest rates on home buyers and sellers. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh Ill.:act on housino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are A reflection of strew-, private credit
demands combined with a large Federal deficit at a time when the Federal
Peserve must moderate the growth of money in order to reduce inflation.
If the Federal reserve were to try to lower interest rates by exoandine
the money supply too aegressively, I am convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, T do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look .forward to
an improvement in inflation and interest rates before too long.
Sincerely,
!iF:sen
f4099
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
letober 26, 1981
Mr. and Mrs. Dave Bailey-Dean
Real Log Homes
P.O. Box 241
Smith Grove, Kentucky 42171
Dear Mr. and Mrs. Bailey-Dean:
Thanks for sending me your letter recarding the effects of high
interest rates on home buyers and sellers. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I rin convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
Oftsav
s4043
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Douglas W. Barr
Dear Mr. Barr:
Thank you for your letter and your expression of support. In the
face of problems we both recognize, your words of encouragement are
particularly appreciated. It was thoughtful of you to take the time to write.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
Dctober 26, 1981
Mr. Chas, Boster, President
Booster Lurber Company
1210 W. Crawford
Salina, Kansas 67401
Dear Mr. Boster:
Thank you for your letter urging that the interest rates be lowered.
The nlain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
In inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Pestorine price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. We know this has been a difficult period for many neople, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
3F:sep
04484
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 26, 1981
Mr. W. S. Boykin
Suburban Charles St. Gallery
6229 N. Charles Street
Baltimore, Maryland 21212
Dear Mr. Boykin:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high Interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BFsevjj
#3047
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mrs. Leland E. Briggs
Dear Mrs. Briggs:
Thank you for your letter and your expression of support. In the
face of problems we both recognize, your words of encouragement are
particularly appreciated. It was thoughtful of you to take the time to write.
Sincerely,
BF:evjj
#2741
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. and Mrs. James S. Brown
Jim Brown Real Estate
1855 Lakeland Drive - Uuilding H
The Quarter - P.O. Box 4832
Jackson. Mi ssi ss poi 39216
Dear Mr. and lrs. Brain:
Thanks for sending re your letter regarding the effects of high
interest rates on home Wyers and sellers. I understand what is happening
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strone private credit
demands combined with a large Federal deficit at a time when the Federal
Peserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
1F:se
f4115
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
)ctober 2, 1T11
Mr. and Mrs. Allen Durdette
Dear Mr. and Mrs. Gurriette:
Thank you for your letter and your expression of support.
of problems we both recognize, your words of encouragement
face
the
In
are particularly appreciated. It was thoughtful of you to take the
time to write.
Sincerely,
'1F:sep
,A346
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
klr. Robert uroer
Burget Construction ; Contracting Corp.
1301 Sixth Street
rarion, Iowa 52302
)ear Mr. 'Artier:
Thanks for sendinn me your letter reoarding the problems high
interest rates have caused you in your attempt to sell the homes in your
inventory. I understand what is happening and I am sympathetic to your
concerns.
The current level of interest rates is undoubtedly having a
narticularly harsh impact on housino and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a lame Federal deficit at a ti rr when the Federal
Peserve must moderate the orowth of money in order to reduce inflation.
If the Federal reserve were to try to lower interest rates by expandino
the money supply too angressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action VI reduce the
Federal deficit.
I know this may sound a bit abstract for kisinesses and
individuals who are narticularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avnidine sore of these basic
issues. f\-t any rate, it is my fervent hope that we can all look forward to
an improverent in inflation and interest rates before ton low%
Sincerely,
;F:sor
4115
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
October 26, 1981
Mr. Harold J. Carey
President
People Bank
899 Pearl Street
Eugene, Oregon 97440
Dear Mr. Carey:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Thank you for your letter concerning money market
mutual funds and their impact on the financial system.
The role of money market funds in our nation's financial
structure has been and continues to be monitored at the Federal
Reserve Board. It is evident that the rapid growth of these
funds is having important consequences for the competitive
positions of financial institutions, the cost and availability
of credit to certain borrowers, and the implementation of
monetary policy. I presented the Board's views on these
matters in testimony before the Congress this past summer and
am enclosing a copy of my remarks in this letter.
I hope you will find these comments useful and I very
much appreciated receiving your views.
Sincerely,
Enclosure
CC:
Mr.
Mr.
Ms.
Ms.
McKelvey
Johnson
Wing
Wolfe (2)
DJohnson/EMcKelvey/JLKichline
#4548
October 26, llel
Mr. Robert Carmouche, President
Carmouche Realty, Inc.
1708 Santa Paula Drive
Las Vegas, Aevada 89104
Jelr
Mr. Carmouche:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand that is happenino and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even hioher interest rates. The
only solution I see in the short run is further action to reduce the
Federal defi ci t.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. It any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lono.
Sincerely,
GF:seg
#4111
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
"'s,-
0ctober 26, 1981
Ms. Diana
Chapman
Dear t'$. Chapman:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happen-Igo
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit,
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do net believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn.
Sincerely,
re-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1931
Mr. Allan B. Chealander
Dear Mr. Chealander:
Thank you for your recent letter expressing support for
the Federal Reserve's efforts to restore price stability.
As you suggest, only by remaining steadfast in our commitment
to slowing the growth of money and credit will we he able to
end inflation. Moreover, progress in this effort will be
hastened by actions complementing monetary restraint, such
as additional efforts to control growth of Federal expenditures
and thus reduce the Federal Government's demands for the economy's
scarce savings and by appropriate private sector behavior.
In your letter you expressed concern about the $2.9 billion
increase in consumer installment credit during the month of
August. The bulk of this increase -- $2.1 billion -- was in
credit to purchase automobiles, whose sales were spurred in
that month by rebate programs. Growth in overall consumer
installment credit generally has been sluggish for the past
year; indeed, total consumer credit expanded at only a 7 percent
rate over the year ending in August 1981, well below the average
rates prevailing in recent years.
Once again, let me thank you for taking the time to express
your viewis on this very important matter.
Sincerely,
CC:
Mr.
Mr.
Ms.
Ms.
Simpson
Spitzer
Wing
Wolfe (2)
JBitzer/TDSimpson/JLKichline
#4577
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Ms. Cynthia Christensen
Century 2I/Key Realty, Inc.
980 N. Kingshighway
Cape Girardeau, Missouri 63701
Dear Ms. Christensen:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happening and I am sympathetic
to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries while
some other sectors of the economy have been relatively unaffected. Current
interest rates, however, are a reflection of strong private credit demands
combined with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply too
aggressively, I am convinced the resultant increase in inflationary expectations
would lead to even higher interest rates. The only solution I see in the short run
is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
vulnerable to changes in credit markets, however, I do not
particularly
who are
way
of avoiding some of these basic issues. At any rate, it
believe there Is any
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
F3F:evjj
#3588
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
411111•0°•"---
Sandy Wolfe
Dorothy Saunders
October 26, 1981
Douglas L. Cochran, Ph. D.
Dear Dr. Cochran:
Thank you for your suggestion and letter and your expression of
support.
In the face of problems we both recognize, your words of
encouragement are particularly appreciated. It was thoughtful of you to take
the time to write.
Sincerely,
V)/
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ictober 26, 1981
Ms. Elizabeth A. Coe
Drawer M
Ruidoso, law Mexico 8P345
Dear Ms. Coe:
Thank you for your letter suggesting that interest rates be
towered to help the economy.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Sirply creatino more money
now would worsen the problem, because inflationary expectations would
suroe, leading to still hioher interest rates. Restnring price stability
unavoidably requires restrained monetary And credit growth.
our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hone is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. !,Ie know this has been a difficult period for many oenple, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for wri ti no.
Sincerely,
2Ftsep
44G1
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
!Ir. Thomas F. Courtney, P.C.
Dear 'Ir. Courtney:
Thanks for sending me your letter regarding the effects of high
Interest rates on the housing industry. I understand what is happenine
and I ma sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong nrivate credit
demands combined with a large Federal deficit at a tire when the Federal
'nerve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supnly too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
a:ser
#44r
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Larry D. Cunningham
Dear Mr, Cunningham:
Thank you for your note saving tb "unlock the economy and lower
interest rates."
The plain fact, however, is that we will not he able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creatino more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. lestorino price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. '4e know this has been a difficult period for many people, and it
is our fervent wish that things will he better for all of us in the future.
Thank you for writing.
Sincerely,
3F:sep
#4454
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Lester G. Day
Executive Vice President
American Development Corporation
One Park Plaza
1250 Wilshire Boulevard, Suite 2000
Los Angeles, California 90010
Dear Mr. Day:
Thank you for your letter commenting on Governor Schultz's
appearance before the NAHB Board of Directors and suggesting several
policy initiatives to reduce interest rates.
I recognize that high interest rates are causing serious
problems for many businesses today, especially smaller firms that are
highly dependent on credit and may have limited resources to fall back
on in difficult periods. Of course, borrowers do not like to pay these
rates, and I am certain that in his letter to you Mr. Manies had in mind
the remarkable persistence of demands for credit by some borrowers,
especially businesses, at historically high rates in this inflationary
environment.
High interest rates do add to costs for businesses, who in
turn attempt to pass them along to consumers in higher prices. But
high interest rates cannot explain continuous inflation. Rather, the
basic direction of causation runs from inflation to high interest rates,
and a permanent and lasting reduction in rates cannot be accomplished
without a permanent and lasting reduction in inflation.
You suggest four different policies to encourage declines in
interest rates. I agree with you that we must reduce the federal deficit,
both to give additional substance and credibility to our anti-inflation
efforts, and to make more funds available to private borrowers in credit
markets. With respect to money market funds, I have recommended to
Congress that the Federal Reserve be granted authority to impose reserve
requirements on these funds, to the extent they are being used for transactions purposes, in order to enhance Federal Reserve control over money
growth and to produce a more equitable competitive balance between the
money funds and depository institutions. I do not believe it would be
fruitful, however, to "jawbone" financial market participants, as you
recommend. Given the record of the last 15 years, investors can be
expected to be quite skeptical of efforts to convince them the end of
inflation is at hand. The financial community, along with labor, consumers,
and business managers will need to see actions and results before they can
be convinced to base their decisions on expectations of permanently lower
inflation and interest rates.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. Lester G. Day
9
For this reason, I disagree with your suggestion that the
Federal Reserve promote less stringent credit conditions by reducing
reserve requirements and the discount rate and keeping money growth at
the top of its range. Such actions, in my view, would cause only a
temporary decline in interest rates. Indications that the resolve of
the Federal Reserve to stop inflation was eroding would soon boost
interest rates, especially longer-term rates, as savers and borrowers
anticipated the coming acceleration of price increases.
We must persist in our policy of gradually reducing money
growth, and we must seek a greater measure of budget discipline to
alleviate the dislocation caused by the current high level of interest
rates. Only in this way will we accomplish the permanent reduction
of inflation and interest rates we both desire.
Sincerely,
DLKohn/JLKichline:tn
#3844
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 19fl1
Mr. Terry Dan
Dear Mr. Dan:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happeninn
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh irpact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strono nrivate credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
F:seP
14476
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 2, 1981
Mt. Edna Dennis
Dear Ms. Dennis:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Peserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
Individuals who are particularly vulnerable to chanpes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
;4?CcI
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1381
Mr. Terry L. DeVaughn, Owner
DeVaughn r:3ui lders
2362 Cajun Drive
Marietta, Georgie 30966
;.)ear Mr. DeVaughn:
Thanks for sending me your letter regarding the problems high
interest rates have caused you in your attempt to sell the homes in your
inventory. I understand what is happening and I am s.ymnathetic to your
concerns.
The current level of interest rates is undoubtedly havinn a
narticularly harsh imnact on housine and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, Are a reflection of streno private credit
demands combined with a lame cederal deficit at a tire when the Federal
deserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by exnandinn
the money sunply too aonressively, I an convinced the resultant increase
in inflationary exnectations would lead to even hinher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit,
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
issues. Pit any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 26, 1981
!Is. Sondra K. Diana
Sales Representati ve
Executive Homes
17416 !lorth 6th Place
Phoenix, Arizona 85022
leer is.
ana:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of stronq private credit
demands combined with a lame Federal deficit at a time when the Federal
reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary exnectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal defi ci t.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 26, 1981
Mr. John N. Dodgen
President
Dodgen Industries, Inc.
Humboldt, Iowa 50548
Dear Mr. Dodgen:
Thank you for your reply to my letter of September 11.
Please be assured that I fully understand that the extraordinary
high levels of interest rates are a cause of considerable concern to
American Business enterprises. I firmly believe, however, that our
country cannot prosper with the kind of inflation that has been allowed
to build over the past several years.
I wish I could tell you that there is an easy way to wring
inflation out of our economy, but there is not. We at the Federal
Reserve believe that maintaining our policy of gradually reducing
money growth offers the best prospect of an ultimate return to price
stability. The process is slow and, in some cases, painful. If we
were to back away from our responsibilities and abandon our pursuit
of monetary restraint there might be a temporary decline in interest
rates, but that would quickly be followed by intensified inflationary
pressures and increased interest rates--possibly to levels higher than
we have already experienced. In such circumstances, the environment
in which you and other entrepreneurs operate would be even worse than
it is now.
The transition from inflation to price stability, however,
could be eased if the Federal Reserve did not have to bear the burden
of fighting inflation alone. The current large Federal deficit is
placing substantial demands on credit markets and, as a result, is
putting extreme upward pressure on Lnterest rates. I strongly support
the efforts of the administration and the Congress to enact further
budget cuts as a way of alleviating such pressures.
Sincerely,
CGlassman/GBurghardt'JZeisel:tn
(#2364)
bcc: Mr. Glassman
Mr. Burghardt
Mrs. Wing
Ms. Wolfe (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Randell Dawson
Dear Mr. Dawson:
Thank you for your letter requesting that I "unlock" the economy
and lower interest rates.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets, tle know this has been a difficult nerind for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
:
445 ,- 11
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 19PI
Mr. Phillip n. Drennan
Dear Ir. Drennan:
Thank you for your letter regarding the effects of hieh interest
rates on housinn and its associated industries. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of stronn private credit demands combined
with a large Federal deficit at a time when the Federal r'eserve must
troderate the ornwth of money in order to reduce inflation. If the Federal
`Zeserve were to try to lower interest rates by expandine the money supply
too aogressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is ifly fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
0
October 26, 1981
Mr. E. J. Dronet
President and
Chief Executive Officer
Cameron State Bank
Post Office Box 430
Cameron, Louisiana 70631
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
Dear Mr. Dronet:
Thank you for your letter concerning the regulation of
money market mutual funds and the phase-out of deposit rate
ceilings at commercial banks and thrift institutions.
The Federal Reserve has studied carefully the issue of
money market mutual fund regulation and concluded that those
money fund shares that can be used for transactions purposes
should be subject to reserve requirements. We believe that
such action would assist the Federal Reserve in formulating
and implementing monetary policy, and at the same time promote
competitive equity among financial intermediaries. Accordingly,
last June, in testimony before the House Subcommittee on Domestic
Monetary Policy, I requested the legislative authority to impose
reserve requirements on the shares on money funds that serve as
the functional equivalent of transactions balances. I regret
to report, however, that the Congress has failed to act on this
proposal.
Regarding your request to maintain some form of deposit
rate ceilings, I would simply observe that the Committee is
required -- by law -- to eliminate all deposit rate controls
by 1986. This action was taken by Congress in the belief that
continuation of the ceilings would hamper the ability of commercial banks and thrifts to compete with open-market instruments
and, at the same time, discriminate against savers choosing to
hold their funds in insured deposits. However, the phase-out is
to be gradual and should allow depository institutions time to
adjust to a more competitive environment in which they would be
able to offer a more complete set of financial services to their
customers. When the limits on deposit rates are fully removed,
the market will allocate funds to their most efficient use,
including the longer-term projects you mention.
Mr. E. J. Dronet
Page 2
I very much understand the concerns that prompted you to
write and I hope you find my comments useful.
Sincerely,
cc:
Mr.
Mr.
Ms.
Ms.
McKelvey
Moran
Wing
Wolfe (2)
MMoran/EMcKelvey/JLKichline
#4311
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Dr. Joseph Dubuque
rear Dr. Dubuque:
Thank you for your further letter and your expression of
support.
As I said before, in the face of difficulties we both
recognize, your words of encouragement are greatly appreciated.
It was thoughtful of you to, again, take the time to write.
Sincerely,
BF/tn
#4349
bcc: Ms. Wolfe
Ms. Saunders
https://fraser.stlouisfed.org
0
Federal Reserve Bank of St. Louis
October 2, 1T1
Mr. Kenneth E. Ourst
Kenneth E. Durst, Inc.
P.O. Box 17163
Tampa, Florida 3382
Dear Mr. Durst:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh imnact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Rese.rve were to try to lower interest rates by expanding
the money sunply ton aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates befnre too lone.
Sincerely,
"X:ser)
;417n
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
!Ir. and Mrs. John Dyke
Endicott Construction Co., Inc.
P.O. Box 357
Midlothian, Virginia 23113
Dear Mr. and Mrs. Dyke:
Thanks for sending me your letter regarding the problems high
have caused you in your attempt to sell the homes in your
rates
interest
what is hanpenino and I am sympathetic to your
I
understand
inventory.
concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh imnact on housino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a tine when the Federal
Reserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expandino
the money supply too aegressively, I am convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this nay sound a bit abstract for businesses and
individuals who are particularly vulnerable to channes in credit markets.
however, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
BF:sep
#4064
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(ktober 26, 1901
!Ir. Stephen A. Eckert
Arector of Administration
Porten Sullivan Corporation
6177 Executive Boulevard
Rockville, Maryland 20852
Dear "r. Eckert:
Thanks for sending me your letter regarding the effects of high
interest rates on home buyers and sellers. I understand what is happening
and T an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh irract on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lend to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound e bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
ff:sep
4172
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
!Thtober 26, 1981
kir. 'I. E. Ellison
Ellison Electric Supply, Inc.
165 W. Division Street - P.n. Box 1235
Fond Du Lac, "isconsin 54935
Dear Ir. Ellison:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havinn P
Particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
7eserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expandinr.1
the money supply too aggressively, I an convinced the resultant increase
in inflationary expectations viould lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
%Ftser
04277
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
7ictobe.r 26, 1931
Mr. 0111 Ferriell. Partner
Ferriell Lorenz Developrent Company
P.O. 3ox 14258
Louisville, !',entuck.y 40214
Dear 71r, Ferriell:
Thanks for sendine rP your letter regardine the problems high
interest rates have caused your buildino and development business. I
understand what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on bousine and other credit-sensitive industries
while son e other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a lane Federal deficit at a time when the Federal
Deserve must moderate the erowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
know this ray sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rites before too long.
Sincerely,
,MT15
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 191
Mr. John 71. Flood, Vice-PresIdent
13reeden Mechanical, Inc.
7635 Leesburg Pike
Falls Church, Virginia 22043
Dear'1r, Flood:
Thanks for sendine me your letter regarding the effects high
interest rates are having on housing and its associated industries. I
understand what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh irract on housine and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look fordard to
an improvement in inflation and interest rates before too intr.
Sincerely,
P4382
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 26, 1981
Mr. Myron C. Floyd
Southern General Construction Co., Inc.
P.P. Box 283
Lake City, South Carolina 29560
Dear Mr. Floyd:
Thanks for sendine me your letter regarding the effects of high
interest rates on housing. I understand what is happenino and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housinp and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a lame Federal deficit at a tire when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aperessively, I am convinced the resultant increase
in inflationary expeotations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
LIF:sen
44040
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0ctober 26, 1981
Mr. Jack Foley, President
Jack Foley Construction Comnany
8003 Woodraont Avenue
Bethesda, Maryland 20014
near Mr. Foley:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happenine. and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
narticularly harsh impact on hnusino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expandina
the mney supply too aegressively, I am convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanees in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too loep.
Sincerely,
,F:sep
44182
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Miss Jo Galiardi
Dear Miss Gsliardi:
I want to express my nincere appreciation and that
of the rest of the Board of Governors for your dedicated and
efficient service for more than eleven years as a member of
the Board's staff. Your assignments in the Division of
Research and Statistics with Mr. Gramley, in the Board Members
Section with Messrs. Hudson and Jones, and as Manager of the
Secretarial Section have provided you an opportunity to share
in some very important work of the Board. We hope you will
look back with pride on this period of your life.
My colleagues on the Board join me in extending best
wishes for many years of good health and personal fulfillment
in your retirement.
Sincerely,
GGS/cic
October 26, 1981
Mr. Joe GardeIla
Creative Cookware, Etc.
1455 Newell Avenue
Walnut Creek, California 94596
Dear Mr. GardeIla:
Thank you for your letter regarding the effects of high interest
rates on your business. I sincerely regret the difficulties you expressed. These
are very troubling times, and I am not insensitive to the problems experienced
by many individuals.
A substantial and lasting improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
fervent wish that things will be better for you in the future.
Sincerely,
31 Ftevjj
443406
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy ‘Volfe
-113,-"thy Saunders
October 26, 1981
Ms, Marcia Geentzel
Custom Care Builders, Inc.
11800 Taft
Yichita, Kansas 67207
Jeer Ms, Geentzel:
Thank you for your card regarding the need you feel to remind
public officials that interest rates need to be lower.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we brine about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably reouires restrained monetary and credit growth.
As our efforts and those of the Coneress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. We know this has been a difficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Thank you for writing.
Sincerely,
October 26, 1981
Mr. Kenneth R. Giddens
WKRG
P.O. Box 2367
Mobile, Alabama 36652
Dear Mr. Giddens:
I appreciate your taking the time to write to me about
your concern that monetary policy is having an adverse effect
on economic activity in your area.
As you correctly point out in your letter, the rapid
creation of money and the existence of large government deficits
have been majcr contributors to the rate of inflation. Moreover, we have all become painfully aware of the detrimental
impacts of inflation and heightened inflation expectations on
many sectors of the economy. Persistent rapid rates of price
increase have discouraged long-term financial commitments and
diverted efforts away from productive pursuits and toward
activities intended only as a shield from the next round of
price increases. The goal of the Federal Reserve is, and has
been, to create a stable economic environment in which businesses
can operate and plan their investments and in which jobs can be
created. This can only occur if price stability is restored.
Because maintenance of control over money and credit is an
essential ingredient in the fight against inflation, the Federal
Reserve has little choice but to continue to pursue a policy of
restraint.
Of course, disciplined monetary policy in conjunction
with a responsible fiscal program will produce, in the short run,
some burdens for certain sectors of the economy. We recognize
that the high cost of credit creates particular problems for
small businesses, especially for borrowers who rely primarily
on lending institutions for financing. Nevertheless, we cannot
avoid these problems by retreating from our present policy and
simply creating more money and credit. I am convinced that in
the end, such a course could only aggravate inflation and
inflation expectations, setting back prospects for a restoration
of economic growth and stability in years to come.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-- 2
Mr. Kenneth R. Giddens
Again, thank you very much for taking the time to
share your thoughts and concerns with me.
Sincerely,
JZickler/DStockton/tn
(#4345)
bcc: Ms.
Mr.
Ms.
Ms.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Zickler
Stockton
Wing
Wolfe (2)
lctober 26, 1981
Mr. C. 3. Goodson
3ailey and Bailey
1425 Jacksonian Plaza
Jackson, Mississippi 39206
)ear Mr. Goodson:
Thanks for sendinn me your letter regarding the effects of high
interest rates on home buyers and sellers. I understand what is hapoeninn
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housinn and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of stronn nrlvate credit
demands combined with a large Federal deficit at a time when the Federal
Reserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avnidinn some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
eincerelv,
+44171
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
october 26, 19R1
Mr. Allen W. Graber
Dear v1r. flraber:
Thank you for your letter regardinn the effects of high interest
rates on farvers and the small business comunity. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on credit-sensitive industries while some other
sectors of the econory have been relatively unaffected. Current interest
rates, however, are a reflection of strong orivate credit demands combined
with a large Federal deficit at a time when the Federal 'eserve must
enderate the growth of money in order to reduce inflation. If the Federal
'Reserve were to try to lower interest rates by expanding the money supply
too aogressively, I am convinced the resultant increase in inflationary
expectations would lead to even hinher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidino some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn.
incerely,
F:.". •
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
=
October 26, 1981
Mr. H. Kevin Granberry. President
Granberry Construction, Inc.
1923 Montoomery Hiehway - P.O. Box 6345
Dothan, Alabama 36302
Dear 'Ir. rlranberry:
Thanks for sending me your letter regarding the problers high
interest rates have caused you in your atter,* to sell the homes in your
inventory. I understand what is happening and I am sympathetic to your
concerns.
The current level of interest rates is undoubtedly having a
narticularly harsh impact on housinn and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a tire when the Federal
eserve must moderate the growth of money in order to reduce inflation.
If the Federal eservo were to try to lower interest rates by expandinn
the money supply too aegressively, I am convinced the resultant increase
in inflationary expectations would lead to even hinher interest rates. The
only solution I see in the short run is further action to reduce the
rederal deficit.
I knew this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an imprPvement in inflation and interest rates before too lone.
`Ancerely,
IT:sep
#4152
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
z
October 26, 1981
Mr. R. Clemson Griggs
Dear Mr. Griggs:
Thank you for your letter and your expression of support. In the
face of problems we both recognize, your words of encouragement are
particularly appreciated. It was thoughtful of you to take the time to write.
Sincerely,
EiFtevjj
03778
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
L:alvin F. Gunn, Esq.
Dear Mr. Gunn:
Thank you for your letter regarding the effects of high interest
rates on the economy, and your suggestion that cuts in Federal spending are
necessary to fight inflation. I understand the concerns that prompted your
message.
I should note that the Federal Reserve is not trying to maintain
any particular level of interest rates. Instead our policy is directed towards
restraining excessive growth in money and credit. History shows that no antiinflation program can be successful without such an effort.
In an economy that is expanding, with prices still not acceptably
stable, strong loan demand and inflationary expectations conflict with the
necessary efforts to moderate money and credit growth, leading to pressures in
financial markets. This situation is particularly difficult for those who are
most vulnerable to credit market pressures. But if we do not bring inflation
under control the problems for all of us will be much greater in the long run.
As you know, there is considerable fluctuation in interest rates.
However, a substantial and long-lasting improvement in interest rates
ultimately depends on bringing about a sustained reduction in inflation. As we
have long maintained, we cannot rely on monetary restraint alone to control
inflation; it must be balanced and complemented by fiscal restraint. The
borrowing requirements of the Federal Government, huge by any measure,
strain financial markets and make it more difficult for the private sector to
borrow. The Administration has proposed many and realized some essential
cuts in public spending. The success of the Administration and the Congress in
reducing spending and ultimately the Federal deficit depends on the support and
understanding of the public.
I appreciate your taking the time to express your views.
Sincerely,
6F:evjj
#3407
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
norothy Saunders
•
r'ctober 26, 1981
Mr. Joe Henry, President
Delmar Development Corp.
1661 South Congress Avenue - Suite #2
west Palm 3each, Florida 33406
Dear Mr. henry:
Thanks for sending me your letter reoardino the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strew.; private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expandine
the money supply too oppressively, I Arl convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Si nce rely,
i-44;
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0ctober 26, 1981
Ms. Jeanne Hill
Jim t.,'est, Realtors
11902 Jones Road
Houston, Texas 77070
Dear Ms. Hill:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a 1 arge Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expandine
the money supply too aggressively, I an convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound A bit abstract for businesses and
individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. r-,t any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
1 F:SeP
44201
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
!Is. Patricia L. Jones
Dear Ms, Jones:
Thank you for your letter regarding the effects of high interest
rates on the economy.
The olain fact, however, is that we will not he able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creatino more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
Ps our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. We know this has been a difficult neriod for many oeople, and it
is our fervent wish that thinos will he better for all of us in the future.
Thank you for writing.
Sincerely,
3F:sep
f4348
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
ms. Ruby Jones
Dear Ms. Jones:
You and I are basically in accord regardino the need for
further reductions in the Federal budget. The Federal Reserve has
long maintained that no anti-inflation program can be successful in
a climate of deficit spending. I recognize, however, our country's
obligations and did not advocate depriving any person or family of
necessary Government assistance. The Administration has proposed
many and realized some essential budget cuts. As these fiscal
measures take hold, along with the monetary policies of the Federal
Reserve, it is my fervent hope that we can all look forward to an
improvement in inflation and interest rates before too long.
Sincerely,
YWF:s1
#2805
cc: Dorothy Saunders (1)
Sandy Wolfe (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Gerhard Jung, President
Home Builders Incorporated
Mrs. Ingeborg Jung, President
CMI Realty Incorporated
900 Bacons Bridge Road
Summerville, South Carolina 29483
Dear Mr. and Mrs. Jung:
Thank you for your letter concerning the "point spread" between the
prime rate and the Consumer Price Index. I am aware of the problems high
interest rates have caused, and I understand the concerns that prompted you to
write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
BF:evjj
g3149
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Christine Kallstrom, Ph. D.
Director
Treetops \lid-Cities Learning Center, Inc.
12,500 S. Pipeline - RR 1, Box 257
Euless, Texas 76039
Dear Dr. Kallstrom:
Thank you for your letter regarding the effects high interest rates
have had on your learning center. I sincerely regret the difficulties you
expressed. These are very troubling times, and I am not insensitive to the
problems experienced by many individuals.
A substantial and lasting improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
fervent wish that things will be better for you in the future.
Sincerely,
BF:evjj
#3576
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
nctober 26, 19P1
Mrs. Bennie Kirkland
P.O. Box 88
Madison, Mississippi
39110
Dear Mrs. Kirkland:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strono private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before ton lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
•
F
October 26, 1981
Mr. Harold S. Kntght
Superior Kitchen Distributors, Inc.
1451 Mi chi gan
Toledo, Ohio 43604
Dear Mr. Knight:
Thanks for sending me your letter regardine; the effects .of high
interest rates on housino. I understand what is hanpening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
L'eserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
EIF:sep
#4161
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. William B. Knipe, Jr.
Real Estate Consultant
William Knipe & Associates
Imperial Plaza, Suite 204
200 North 3rd Street - P.O. Box 986
Boise, Idaho 83701
Dear Mr. Knipe:
Thank you for your letter regarding the Effects of high interest rates
on the economy. I understand what is happening and I am sympathetic to your
concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined with
a large Federal deficit at a time when the Federal Reserve must moderate the
growth of money in order to reduce inflation. If the Federal Reserve were to
try to lower interest rates by expanding the money supply too aggressively, I am
convinced the resultant increase in inflationary expectations would lead to even
higher interest rates. The only solution I see in the short run is further action
to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BF:evjj
173598
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 26, 1981
Mr. Arthur O. Kresse
Kresse & Sons, Inc.
11709 Coldstream Drive
Potomac, Maryland 20854
Dear mr. Kresse:
Thanks for sending me your letter regarding the effects high
interest rates are having on housing and its associated industries. I
understand what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expandine
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn.
Sincerely,
8F:sep
14392
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1P61
";adine Lovelady
Lovelady Realty
r;ox 267
2000 '!orth Dal Paso
Hobbs. :riew Mexico 88240
Dear ft. Lovelady:
Thanks for sending me your letter regarding the problems high
interest rates have created for housing in your city. I understand what is
happening and I am symnathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh. impacton housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanoes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
BF:set)
;4365
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0ctober 26, 19P,1
and Mrs. Al NLundstedt
Dear !lr. and Mrs. Lundstedt:
Thanks for sendino me your letter regarding the effects high
are having on housing and its associated industries. I
rates
interest
understand what is haprening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are A reflection of strong nrivate credit
demands combined with a large Federal deficit at a time when the Federal
veserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by P xpandlnn
the money supply too aggressively, I an convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this ray sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an iranroverient in inflation and interest rates before too long.
Sincerely.
:1F:sep
0265
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Terry McCarty
P.O. Box 762
Mt. Pleasant, Texas 75455
Dear Mr. McCarty:
Thank you for your letter concerning a return to the gold
standard.
As you may know, the Congress has established a commission to
examine the issues you have raised. Three members of the Federal Reserve
Board will serve on that commission, and we are confident that there will be a
full and timely examination of the questions involved in having gold play a more
prominent role in our monetary system.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 26, 1981
Mr. Fred L. McNair
McNairs Appliance Inc.
6225 Burnet Road
Austin, Texas 78757
Dear Mr. McNair:
Thank you for your letter concerning the "spread" between the
prime rate and the Consumer Price Index. I am aware of the problems high
interest rates have caused, and I understand the concerns that prompted you to
write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
BF:ev jj
03054
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Dr. Richard A. MacDonald
Dear Dr. MacDonald:
Thank you for your letter urging credit restrictions for large
corporations. I appreciate your suggestion; however, our experience with credit
controls last year only confirmed our view regarding the difficulties with any
attempts to allocate credit or intervene substantially in the credit decisions of
private lenders. To have lower interest rates and a more stable economy, we
must have a sustained reduction in inflation, and monetary and fiscal policies
must work to achieve these objectives.
I appreciate your writing.
Sincerely,
BF:evjj
2755
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy ;Voile
Dorothy Saunders
October 26, 191
Meadows Enterprises
Jear Sirs:
Thank you for your letter asking how long the interest rates will
remain high.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
suroe, leading to still higher interest rates. estoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Adrinistration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in oovernment spendine and the
federal deficit will help to ease oressures on interest rates and credit
markets. '4e know this has been a difficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
3F:sep
44247
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr, Joe Mendicina,
Real tor—Aucti oneer
Joe Mendicina Real Estate
and Auction Service
125 East Iron Avenue
Salina, Kansas 67401
Dear mr. Mendicina:
Thank you for your letter and your "key" to lower interest rates.
The nlain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
In inflation and inflationary expectations. Simnly creatine more money
now would worsen the problem, because inflationary expectations would
surge, leadine to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Coneress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in oovernment spending and the
federal deficit will help to ease pressures on interest rates and credit
mrkets. 4e know this has been a difficult period for many people, and it
is our fervent wish that things will he better for all nf us in the future.
Thank you for writing.
Sincerely,
Ari;:se
#4451
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lctober 26, 1981
Mrs. Mary Mikolai
near
rs. Mibolai:
Thanks for sending me your 1Ptter expressing support for the policies
of the Federal Reserve and your statements about the effects of high interest
rates onhhousing. I understand what is hanpening and I ar syrpathetic to your
concerns.
The current level of interest rates is undoubtedly havinn a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
T know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
'F:sfm
?4n14
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Raymond W. Miller
Miller Electric Construction, Inc.
P.O. Box D - 4038 Alpha Drive
Allison Park, Pennsylvania 15101
Dear Mr. Miller:
Thanks for sending me your letter regarding the problems high
caused you in your attempt to sell the homes in your
rateshhave
interest
understand
what is happening and I am synrathetic to your
inventory. I
concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined. with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too egeressively, I an convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
j:sen
#4376
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Herbert Morewitz
John Hancock Mutual Life
Insurance Company
P. O. Box 2739
Newport News, Virginia 23602
Dear Mr. Morewitz:
Thank you for your letter regarding energy, OPEC, and
the need for synthetic fuels. While energy is not among the Federal
Reserve's principal responsibilities, there is no denying that in
the past several years, petroleum prices have had a major impact
on our economy and are properly matters of continuing concern.
Thank you for taking the time to express your views.
Sincerely,
i
WF:s1
#2730
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Dorothy Saunders (1)
Sandy Wolfe (2)
•
October 26, 1981
Ms. Pamela Mose
lear Is. mose:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happening and I am
bympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while snre other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with e lame Federal deficit at a time when the Federal
reserve must moderate the erowth of money in order to reduce inflation.
If the Federal eserve were to try to lower interest rates by expandino
the money supply too aogressively, I am convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, T do not believe there is any way of avoiding some of these basic
issues. It any rate, it is my fervent hope that we can all look forwPrd to
an improvement in inflation and interest rates before too long.
Sincerely,
r3F:sen
44059
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. M. S. Moser
Chairman of the Board
Durabla Manufacturing Company
27 Industrial Blvd.
P.O. Box 1010
Paoli, Pennsylvania 19301
Dear Mr. Moser:
Thank you for your letter stating that since "inflation has come
under reasonable control," the interest rates should be lowered. I am aware of
the problems high interest rates have caused, and I understand the concerns
that prompted you to write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts In Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
BF:evjj
g 3236
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Charles Munyer
Dear mr. Munyer:
Thank you for your letter and the information concerning
Soviet and American military statistics. Strictly speaking, disco
unt
rate movements are not an important influence on general inter
est
rates because of strict limitations on discount window funds
. The
purpose of the Federal Reserve discount window is to provide
individual
banks with a temporary source of funds in situations where
they are
caught in an unexpected liquidity bind.
Current interest rates are a reflection of strong priva
te
credit demands combined with a large Federal deficit at a time
when
the Federal Reserve must moderate the growth of money in
order to
reduce inflation. If the Federal Reserve were to try
to lower interest
rates by expanding tle money supply too aggressively,
I am convinced
the resultant increase in inflationary expectations would
lead to even
higher interest rates. The only solution I see in the short
run is
further action to reduce the Federal deficit.
I know all of this may sound a little abstract for industries
with the types of problems many are now suffering, but I am afrai
d
there is no way around some of these basic issues. At any rate,
it
is my fervent hope that we can all look forward to an improvement
in
inflation and interest rates before too long.
Sincerely,
WF:sl
#2714
cc: Dorothy Saunders (1)
Sandy Wolfe (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Ms. Sylvia 1. leville
Dear Ms. 4eville:
Thank you for your letter asking that the Federal Reserve Board
work to lower the interest rates.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
In inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spendinp and the
federal deficit will help to ease nressures on interest rates and credit
markets. le know this has been a difficult period for many peonle, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
8F:sep
#4419
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0ctober 26, 1q81
r. Gary L. mman
Dear
Thanks for sending no your letter, and the letter from your associate,
lohn Bradshaw, regarding the effects high interest rates have had on housinn
and its associated industries. I understand what is happening and I an
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
.leserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I an convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further Action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
Issues, At any rate, it is my fervent hone that we can All look forward to
an improvement in inflation And interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
ictober 26, 1981
Mr. William T. O'Brien
Legal Counsel
Presley of Southern California
P.n. Box 2200 - 4600 Campus Drive
lewport Beach, Calffornia 92663
Dear Mr, O'Brien:
Thanks for sending me your letter regarding the effects of high
Interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a laroe Federal deficit at a time when the Federal
Reserve must moderate the orowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too agoressively, I an convinced the resultant increase
in inflationary exnectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
Individuals who are Particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidinn some of these basic
issues. ft,t any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn.
Sincerely,
,F:e;
• 44512
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
nctober 2E, 1981
Ms. Jean M. O'Leary
Dear 'Is. O'Leary:
Thanks for sending me your letter reearding the effects of high
interest rates on realtors. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly havine
earticularly harsh impact on housine and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands cor,bined with a large Federal deficit at a time when the Federal
n.eserve must moderate the growth of money in order to reduce inflation.
If the Federal Peserve were to try to lower interest rates by expandine
the money supply too aggressively, i n convinced the resultant increase
in inflationary expectations 4euld lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal defici t.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
n cc rely,
lq:seo
#4107)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
%tober 26, 1981
71r. Fred M. Partenheimer
Camelot Homes
2784 W. Maplewood
Springfield, Missouri 65107
Dear Mr, Partenheiner:
Thanks for sending me your letter e.xpressinr your fears that the
may be bearing more than its share of the current high
industry
housing
interest rate problem. I understand what is happening and I am sympathetic
to your concerns.
The current level of interest rates is undoubtedly having A
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the orowth of money in order to reduce inflation.
If the Federal Reserve Were to try to lower interest rates by expanding
the money supply too aggressively, I ar convinced the resultant increase
In inflationary expectations would lead to even hicher interest rates. The
only solution I see in the short run is further action to reduce the
Federal defi ci t.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanoes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
Issues. At any rate, it is my fervent hope that we can all look forwarci to
an imprnvement in inflation and interest rates before too lone.
Sincerely,
"F:sep
42t3
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26. 1981
:Ir. Robert C. Faulk
Century 21/Tr City Realty Company
1701-A Osborne Street
St. Marys, Georgia 31558
')ear Mr. Paulk:
Thanks for sending me your letter regarding the effects high
interest rates are havino on housing and its associated industries. I
understand what is happening and I ar sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh imact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong nrivate credit
demands combined with a large Federal deficit at a time when the Federal
7,eserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I air convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an inprmerent in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
•
•
October 26, 1981
Yr. John Pearson
Page County Appliance Center, Inc.
517 West Sheridan Avenue
Shenandoah, Iowa 51601
Dear Mr. Pearson:
Congressman Harkin forwarded your letter to me in which
you indicate concern about high interest rates.
I very much understand your concerns over the intense
pressures faced by many firms and individuals as a result of high
interest rates. We all very much want to see lower interest rates,
but a sustained lower level of rates can only be achieved by a reduction in inflation and inflationary expectations. The Federal
Reserve could attempt to lower imttregt rates only by expanding
the supply of money at an accelerated pace. Such a policy, however, would shortly add fuel to the fires of inflation and lead
to still higher rates.
I believe we are beginning to see some signs of progress
in unwinding the inflationary spiral, and I remain hopeful that a
consistent stance of monetary restraint, coupled with prudent fiscal policies, will prove successful over time in returning the
country to prosperity.
Sincerely,
siPaul Vgiaec.
CC:
Congressman Tom Harkin
LW:JLK:vcd (V-311)
bcc:
Ms. Wing
Mrs. Mallardi (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Charles A. Pechette, President
Merit Homes Inc.
3350 Founders Road
Indianapolis, Indiana 46268
Dear Mr. Pechette:
Thank you for your recent letter in which you support monetary
speeded up
restraint but suggest that growh in the narrow money stock be
year.
this
for
set
range
growth
target
the
into
to bring that aggregate
As you may know, the Federal Reserve in its Monetary Policy
growth
Report to Congress in February of each year establishes annual
d in a
reviewe
are
ranges
These
tes.
ranges for several monetary aggrega
Ml-B,
in
growth
1981,
in
far
Thus
July.
second Report to Congress each
to 6
3-1/2
its
d
below
remaine
has
s,
adjusted for shifts to NOW account
ion
definit
s
in
this
,
weaknes
However
percent target range for the year.
y
monetar
of
the
degree
or
of
indicat
of money likely is a misleading
hness
tautness. The available evidence suggests that the recent sluggis
of
tion
ve
applica
more
intensi
in this measure has resulted from
uals
sophisticated cash management techniques by firms and even individ
s
deposit
tion
s
of
transac
that is directed toward slashing holding
levels of
relative to levels of spending. In other words, current
balances
M1
of
spending are being carried out with smaller amounts
t, the
contras
By
nce.
than would be suggested by historical experie
tive
alterna
liquid
highly
M2 and M3 definitions of money, which include
of
ends
upper
the
above
or
to transaction deposits, are growing near
their respective ranges.
If the Federal Reserve were to take steps to spur--rather than
policy might
restrair--monetary growth, such a shift in the direction of
deep-seated
n
already
heighte
and
serve only to unsettle financial markets
is in fact
ent
governm
the
fears --reflected in depressed bond markets--that
successful
a
to
on
through
not committed to seeing the fight against inflati
presprice
fy
intensi
to
tend
end. Moreover, added monetary stimulus would
root
the
at
is
that
sures in the economy, worsening the inflation problem
of this process would
of today's high interest rates. The end result
inevitably be higher, not lower, interest rates.
Sustained economic growth that we all seek can only occur in
levels of interest
an environment of reduced inflation. Permanently lower
ed that the
rates will be achieved only when market participants are convinc
In
recent
tion.
restoration of price stability is a realistic expecta
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. Charles A. Pechette
-- 2
months we have seen preliminary signs that inflation is beginning to
slaw. Consistent policy actions that allow such evidence to accumulate
eventually will bring with them lower interest rates. The road toward
lower interest rates will be shortened by prompt evidence that steps
are being taken to reduce the burden federal credit demands place on
credit markets, increasing the share of the economy's scarce savings
available for private sector investment.
Thank you again for your views on this important issue.
Sincerely,
TBrady:JLKichline--tn
(#4520)
bcc: Mr. Kichline
Mr. Brady
Ms. Wolfe (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0ctober 26, 1981
Mr. Albert K. Perry
Dear Pr, Perry:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strone private credit
demands combined with a large Federal deficit at a time when the Federal
neserve must moderate the orowth of money in orcier to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aogressively, I am convinced the resultant increase
in inflationary expectations would lead to even hicher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look fomard to
an imProvement in inflation and interest rates before too lono.
Sincerely,
F:sop
.!:409R
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 26, 1981
Mr. Earl Pettibone
Dear Mr. Pettibone:
Thank you for your letter regarding the effects high interest rates
have had on your business endeavors. I sincerely regret the difficulties you
expressed. These are very troubling times, and I am not insensitive to the
problems experienced by many individuals.
A substantial and lasting improvement in interest rates ultimately
depends on bringing inflation down. As monetary and fiscal policies work to
reduce long term inflation, it is my hope that we can all look forward to a
healthier economy and lower interest rates.
I know this has been a difficult period for many people, and it is my
fervent wish that things will be better for you in the future.
Sincerely,
BF:evjj
4'3744
cc:
https://fraser.stlouisfed.org
•
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 26, 19g1
Mr. Garland Phillips
)ear Mr. Phillips:
Thank you for your letter stating that you feel the Federal Reserve
Should "make every effort" to lower the interest rates.
The plain fact, however, is that we will not he able to have
sustained lower interest rates until we brine about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restorino price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Conoress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. '.1e know this has been a difficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Thank you for writing.
Sincerely,
Cctober 26, 1981
Mr. Fred Pond
"nod & Spitz Building Corp.
.1. 6 - Atsion :?.oad
,,,edford. ;Iew lersey 08055
Dear 14r. Pond:
Thanks for sendina me your letter regarding the problems high
interest rates have caused you in your attempt to sell the homes in your
inventory. I understand what is happening and I am sympathetic to your
concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a lame Federal deficit at a time when the Federal
Teserve must moderate the growth of money in order to reduce inflation.
Tf the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
In inflationary exnectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avnidinn some of these basic
issues. At any rate, it is my fervent hole that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
F:sep
!/4211
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
rr. G. Don Poore
Don Poore Company, Realtors
600 East !iorth Plaza - Suite 206
nreenvi 11 e, South Carolina 29611
Dear 'Ir.
P oore:
Thanks for sending me your letter regarding the effects of high
on the housing industry. I understand what is hapnenine
rates
interest
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havinn a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I an convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit,
T know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
J:sep
#4274
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. William H. Price II
Dear Mr. Price:
Thank you for your letter of September 30, 1931, ancl
your kind words of support.
In your letter you suggest that reserve requirements
be extended to money market mutual fund shares. As you may
know, in a recent testimony before the House Subcommittee on
Domestic Monetary Policy, I requested the authority to impose
reserve requirements on money fund shares that can be used
for transaction purposes. We believe that this extension of
reserve requirements would assist the Federal Reserve in
formulating and implementing monetary policy and would enhance
the competitive equity between various financial intermediaries.
I regret to report, however, that the Congress has failed to
act on our proposal.
You may, however, be encouraged to know that the Depository
Institutions Deregulation Committee (DIDC) is considering several
proposals to improve the competitive position of commercial banks
and thrifts. Specifically, at its December meeting, the Committee
will consider the authorization of a short-term instrument whose
attributes, in comparison to existing deposit accounts, more
closely parallel those of the money market mutual funds. In
preparation for that discussion the Committee will shortly be
publishing for comment a set of proposals for such an instrument.
I urge you to take advantage of this opportunity to make your
views known.
Sincerely,
MMoran/EMcKelvey/JSZeisel:tn
(#4041)
bcc: Mr. McKelvey, Mr. Moran, Ms. Wing, Ms. Wolfe (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. and lirs. Lee R. Prince
Pear Mr. and Mrs. Prince:
Thanks for sending re your letter regarding the effects of high
interest rates on home buyers and sellers. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively. I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an Improvement in inflation and interest rates before too long.
cIncerely,
4:sep
;4154
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Ms. Anne Qualman
Dear Ms. Qualrnan:
I have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
EiFsev jj
#3772
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Ms. Hazel Rayburn
Dear Ms. Rayburn:
Thank you for your letter stating that interest rates "must core
down very soon."
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
Pts our efforts and those of the Congress and the .1drinistration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in governrnent spending and the
federal deficit will help to ease Pressures on interest rates and credit
markets. We know this has been a difficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
10:set,
#4275
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. R. G. Rollins
Richmond Southern
P.O. Box 711
Augusta, Georgia
Dear Mr. Rollins:
Thank you for your postcard expressing your concern over the "point
spread" between the CPI and the prime rate. I am aware of the problems high
interest rates have caused, and I understand the concerns that prompted you to
write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
3F:evjj
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•ir
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20E51
October 26, 1981
PAUL A. VOLCKER
CHAIRMAN
The Honorable Benjamin S. Rosenthal, Chairman
Commerce, Consumer, and Monetary Affairs
Subcommittee
Committee on Government Operations
Rayburn House Office Building, Room B-377
Washington, D.C. 20515
Dear Chairman Rosenthal:
I am pleased to respond to your recent request for information
for use by the Commerce, Consumer and Monetary Affairs Subcommittee
in connection with its inquiry into federal regulatory agency enforcement
of the Community Reinvestment Act.
In your letter of September 15, 1981, you requested the CRA
portions of the most recent two examinations conducted by the Board
with respect to Chemical Bank, Manufacturers Hanover Trust Company and
Bankers Trust Company, all of New York City; copies of all comments
received by the Board and by the three above-mentioned institutions
regarding CRA statements or the performance of these institutions in
helping to meet credit needs of their communities for the period covered
by the past two examinations; and a list of all applications by these
institutions for new branches, acquisitions or mergers, together with
any determinations made by the Board based on CRA considerations for
the period covered by the past two examinations, including comments
made upon these applications by the Board's staff.
The list you requested of applications by the three institutions
is enclosed. No applications from Bankers Trust Company were acted
on in the period specified in your letter. Only three applications
raised CRA issues. We will provide you with copies of the Board and
Reserve Bank orders in these cases, and the one other in which the Board
issued an order, those portions of the staff and Reserve Bank memoranda
that discuss CRA issues, as well as public and other comment letters
associated with the applications that are in our files. For reasons
set forth more fully below, the staff has deleted the few references
to confidential examination report information from the memoranda being
provided to you.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
le Honorable Benjamin S. Rosenthal,
Chairman
-2-
Letters submitted directly to the three named banks, by members
of the public for inclusion in their CRA files, are not routinely copied
to the Board or to the Federal Reserve Bank of New York. Accordingly,
the public comment letters we are also providing to you--consisting
of all that we have, including letters relating to the four referenced
applications--may not include all letters submitted directly to the
banks by members of the public. Such documents are on public file in
each of the banks. If you wish, my staff will assist in any way it
can in the event the Subcommittee's staff encounters difficulty obtaining
these documents from the banks.
The above represents most of the information contained in
that is responsive to your request. I believe, however,
files
Board
be inappropriate for me to transmit CRA portions of the
would
that it
two most recent consumer affairs reports of examination of the three
banks in response to the request contained in your September 15 letter.
This judgment is based upon longstanding Board practice and policy regarding
the confidentiality of examination report information.
The effectiveness of the examination process requires that
examinations be conducted under circumstances that promote the greatest
possible freedom of communication between bank officials and examiners,
as well as the greatest freedom of expression by the examiners themselves.
We strongly believe that these objectives can be accomplished only by
preserving rigid confidentiality as to reports of examination. If bank
officials have cause to believe that information they provide may be
exposed to others outside the examining agency, or if examiners believe
that their analyses and judgments will be subject to outside scrutiny,
inhibitions and distortions of expression will inevitably be created,
with the likely result that the effectiveness of the examination process
will be impaired.
I hope that the enclosed materials will be helpful to your
Subcommittee.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Siz7erely,
/hil(lat&t-
October 26, 1981
The Honorable Fernand J. St Germain
Chairman
Committee on Banking, Finance
and Urban Affairs
House of Representatives
20515
Washington, D.C.
Dear Chairman St Germain:
I am writing to express strong support for H.R. 4603,
the Deposit Insurance Flexibility Act. As we know, the thrift
industry is undergoing substantial strain, and this bill would
with
enhance the powers of the supervisory authorities to deal
problem situations as they may arise.
Essentially, the bill augments the existing powers of
the
the regulatory agencies in two ways. First, it extends
,
Second
es.
agenci
capital infusion authority of the insurance
earrang
ition
it clarifies and broadens the merger and acquis
ant
ments available to the regulators. These provisions are import
ng
managi
for
and
for providing assistance to thrift institutions
the resources of the insurance funds.
This is a limited bill that is modest in scope and
fundatemporary in duration. It is not designed to bring about
it is
r,
Howeve
mental change or reform in the financial system.
with
es
needed at the present time to arm the supervisory agenci
and
stress
necessary tools and flexibility in a period of severe
ss
Congre
strain on our financial institutions. I would hope that
would
would act promptly to enact this legislation. Such action
for subsequent
not and should not prejudice or eliminate the need
ng
consideration in the near term of fundamental issues relati
to structural changes in the financial system.
Sincerely,
DS:DJW:pjt
bcc: Mrs. Mallardi
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
october 26, 1981
Mr. Albert L. Schachtner, President
Security }tomes, Inc.
1204 Chelwood, N.E.
Albuquerque, riew Mexico 8,7112
Dear Mr. Schachtner:
Thanks for sending me your letter expressing your fears that the
housing industry nay be bearing more than its share of the current high
Interest rate problem. I understand what is happening and I an synnathetic
to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the econory have been relatively unaffected.
Current interest rates, however, are a reflection of strone ri va te credit
demands combined with a laroe Federal deficit at a time when the Federal
P,eserve must moderate the orowth of money in order to reduce inflation.
If the Federal reserve were to try to lower interest rates by exnanding
the money supply too aogressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action tn reduce the
Federal deficit.
know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanoes in credit markets,
however, I &) not believe there is any way of avoiding sorr of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn.
Cincere.ly,
5F:sep
#4276
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lctober 26, 1981
Mr. E. Jay Schrock, General Manager
Woodwork Manufacturing & Supply
401 South Adams
Hutchinson, Kansas 67501
Dear Mr. Schrock:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even hinher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidinn sore of these basic
issues. .1t any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
tstp
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Cleon M. Shutt, Jr.
Roland Park Gallery
Russell T. Baker & Co., Inc.
500 Wyndhurst Avenue
Baltimore, Maryland 21210
Dear Mr. Shutt:
1 have received your letter expressing disagreement with the
monetary policies of the Federal Reserve. I can understand your concern, but I
believe abandoning our policy of monetary restraint would ultimately harm
rather than help businesses and individuals vulnerable to changes in credit
market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
with the need to finance a large Federal deficit at a time
combined
credit,
Reserve must moderate the growth in money and credit to
Federal
the
when
control. Your suggestion, though well intended, would
under
bring inflation
eventually causing still higher interest rates and
inflation,
aggravate
serve to
conditions.
worse economic
1 believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:evjj
#3699
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26. 1981
Derk Simonson, President
Simonson Enterprises, Inc.
4774 Olde Village Lane
Dunwoody, Reorgia 30333
Dear !Ir. Simonson:
Thanks for sending me your letter regardino the effects of high
interest rates on hone buyers and sielers. I understand what is happening and
I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a laroe Federal deficit at a time when the Federal
Peserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
a:sep
#4071
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Snith
"s. Evelyn Pusateri
RE/MAX Professionals
9117 Leesgate Drive
Louisville, Kentucky 40222
Dear Misses Smith and Pusateri:
Thanks for sending me your letters regarding the effects of high
interest rates on hone buyers and sellers. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money suoply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however. I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
42s*p
f4139
14215
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Is. Kathy Smith
Dear Ms. Smith:
Thanks for sendinp me your mailgram regarding the effects of high
interest rates on housing. I understand what is happening and I am sympathetic
to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a lame Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I an convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
T. know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonp.
Sincerely.
F:seP
f4176
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
'Ir. James I. Sorensen
Vice President
nillanders & Stark Development Co., Inc.
5039 North Aineteenth Avenue - Suite Eight
Phoenix, Arizona 85015
Dear Mr. Sorensen:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happenine and I am
sympathetic to your concerns.
The current level (If interest rates is undoubtedly having a
Particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
cincerely,
4050
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
!Ir. Stephen R. Stahl
Democracy Development Company
9113 Potomac Station Lane
Potomac, Maryland 20854
Dear Yr.
Thanks for sending me your letter regardino the effects of hich
Interest rates on housing. I understand what is happeninq and I am
symnathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strono private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the orowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aeoressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
i3F:sep
#4117
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
fs:ctoher 26, 1981
”.r. Steve Thompson
•Ieal Conner
Lexington lsealty, Inc.
706 'Al. Second Avenue
Lexington, North Camlina
27292
Dear Messrs. Thomson and Conner:
Thanks for sending me your letter regarding the effects high
interest rates are havincr on housing and its associated industries. I
understand what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
narticularly harsh impact on housine and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Ttirrent interest rates, however, are a reflection of stmno private credit
demands combined with a large Federal deficit at a time when the Federal
neserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aeoressively, I am convinced the resultant increase
in inflationary exnectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
know this may sound a hit abstract for businesses and
individuals who are narticularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. !t any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too lono.
Sincerely,
IF:sep
i4273
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. Peter C. Trent
Chairman
Public Securities Association
One World Trade Center
New York, New York LAW
Dear Mr. Trent:
Thank you for sending me a copy of your remarks given
before the Joint Economic Committee of Congress concerning the
problems of the municipal securities market.
1 agree with you that the fuedamental problem facing
the munieipal asast is inflation end the high interest rates that
accompany it. A lasting solution to inflation, I believe, requires
a gradual reduction in the growth of money and credit, which the
Federal Reserve is seeking to achieve, and a reduction in the size
of federal budget deficits. We appreciate your support in pursuing
these goals. As you know, we have seen some preliminary signs that
inflation is slowing and 1 em confident that, with the passage of
time, our efforts will bear fruit.
Sincerely,
DLaufenberg:GBurghardt:DKohn:JSZeiscl--tn
(#4053)
bcc: Mr.
Mr.
Mr.
Hg.
Ma.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
McKelvey
Burghardt
Laufenberg
Wing
Wolfe (2)
October 26, 1981
f4rs, Harold Tucker
Dear
.7rs.
Tucker:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh imeact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a tire when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expandino
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. 'Vt any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn.
Sincerely,
nep
s42;1
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Al
)ctober 26, 19R1
Mr. Edward L. Varney, President
V. R. K. 3uilders, Inc.
4025 East Holt Road
Holt, Michigan 4$842
Dear fir. Varney:
Thanks for sending me your letter regarding the effects of high
interest rates on the housing industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by exnanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is ray fervent hope that we can all look forward to
an imrovernent in inflation and interest rates before too long.
Sincerely,
Ftsep
#449F
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
6ctober 26, 1981
Mr. Andre Venables
Kitchens by Andre
25 North Chestnut Street
dew Paltz, dew York 12561
Dear Mr. Venables:
Thank you for your letter stating that I need to attempt to lower
the mortgage and loan rates.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. We know this has been a difficult period for many people, and it
Is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
3F:seo
0459
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Ms. Charlotte A. Wallace
lear Ms. 'Iallace:
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh irpact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the orowth of money in order to reduce inflation.
If the Federal Peserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improverent in inflation and interest rates before too long.
Sincerely,
PF:sep
44155
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
October 26, 1981
Mr. Tom Walther
Sin—Con Corp.
P.O. Box 98
Medway, Ohio 45341
Dear Mr. Walther:
Thank you for your letter requesting that I work to reduce the
interest rate imediately.
The nlain fact, however, is that we will not he able to have
sustained lower interest rates until we brine about a sustained reduction
in inflation and inflationary expectations. Simply creatinq more money
now would worsen the problem, because inflationary expectations would
surge, leadinn to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit orowth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in novernment spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. We know this has been a difficult period for many people, and it
is our fervent wish that things will he better for all of us in the future.
Thank you for writing.
Sincerely,
ET:sep
#4213
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
:Ictoher 26, 19P1
Captain C. 0. !4ard
P.O. Box 4365
Santa Fe, Aew Mexico 87502-4365
Dear Cantain
Thank you for your letter advocating the immdiate reduction of
interest rates.
The nlain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
suroe, leading to still higher interest rates. estoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Coneress and the Adrinistration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in oovernment spending and the
federal deficit will help to ease Pressures on interest rates and credit
7..larkets.
e know this has been a difficult period for many people, and it
is our fervent wish that things will he better for all of us in the future.
Thank you for writine.
Sincerely,
'F:sor
4441
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. John R. Waters
Dear Mr. Waters:
Thank you for sending me your paper on restructuring
the real estate market. You have obviously given the matter a
great deal of thought, but as you also obviously recognize, your
suggestion involves a great many complications. I appreciate
your taking the time to send me your views on this matter. I
am also returning your quarter; the coffee was on me.
Sincerely,
Enclosure
WF:sl
#2762
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Dorothy Saunders (1)
Sandy Wolfe (2)
October 26, 19n1
tit-. Lee Webb
Jack Fry Lurber Co., Inc.
1601 Erskine Road - Box 5551
Lubbock, Texas 79417
)ear Mr. ebb:
Thanks for sending me your letter regarding the problers high
interest rates have caused you in your attempt to sell the bones in your
inventory. I understand what is happenine and I am sympathetic to your
concerns.
The current level of interest rates is undoubtedly havine
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of stronn private credit
demands combined with a large Federal deficit at e time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal reserve were to try to lower interest rates by expandinc
the money supply too agoressively, I am convinced the resultant increase
in inflationary exeectations would lead to even hioher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for husinesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
Issues, At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
see
k4114
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
is. Diana G. 'leis
Dear Is. "eis:
Thank you for your letter requesting that I attempt to lower
interest rates so that you can buy a car.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary expectations. Simply creating more money
now would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restoring Price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower Interest rates. Certainly reductions in novernment spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. Ye know this has been a difficult period for many people, and it
is our fervent wish that thinos will he better for all of us in the future.
Thank you for writing.
Sincerely,
r;F:sep
;4420
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
nctober 26, 1981
r. R. Keith '..lhitmer
'Thitmer Building Products
1401-E Allendale Road - P.O. Pox 1413
.iest Palm Beach, Florida 33402
Dear Mr. Whitmer:
Thanks for sendino me your letter regarding the effects high
interest rates are having on housi no and its associated industries. I
understand what is happening and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh irpact on housing and other credit-sensitive industries
some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strono private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the orowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even hioher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this nay sound a bit abstract for businesses and
individuals who are Particularly vulnerable to chances in credit markets,
however, I do not believe there is any t•'ay of avoiding sore of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
ncerely,
;F:sep
.-4279
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 2€, 19.81
Mr. Donald G. Wiland
Dear Mr. "iland:
Thanks for sending me your letter regarding the effects high
interest rates are having on housing and its associated industries. T
understand what is happening and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
narticularly harsh impact on housinn and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strono private credit
derands combined with a large Federal deficit at a time when the Federal .
Reserve rust moderate the nrowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidinn sore of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improverient in inflation and interest rates before too lone.
Sincerely,
3F:sep
#43n1
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1931
Mr. liaverly
Dear Mr. '11liars:
Thanks for sending me your letter regarding the effects high
interest rates are having on hcusing and its associated industries. I
understand what is happening and I am synpathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a lame Federal deficit at a time when the Federal
reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too appressively, I am convinced the resultant increase
in inflationary expectations would lead to even hioher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an irprovernent in inflation and interest rates before too lon9.
cAncerely,
:17:ser
')41191
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
,%ir. Bob Wilson
Big Hill Realty, Inc.
5580 Far Hills Avenue
Dayton, Ohio 45429
Dear Mr. Wilson:
Thanks for sending me your memo regarding the effects of high
interest rates on housing. I understand what is happening and I am sympathetic
to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries while
some other sectors of the economy have been relatively unaffected. Current
interest rates, however, are a reflection of strong private credit demands
combined with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply too
aggressively, I am convinced the resultant increase in inflationary expectations
would lead to even higher interest rates. The only solution I see in the short run
is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BF:evjj
#3672
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
October 26, 1981
is,-iancy Y-ittig, Realtor Associate
IS,i-ieide Ass Avery, Realtor Associate
Carson-Carolina Partners
1725 i. :lain Streeet (17-A Aorth)
Suite 107
Surnerville, South Carolina 294l3
Dear Misses %Attic; and Avery:
Thanks for sending me your letters expressing the problem high
interest rates are causing home buyers and sellers. I understand what is
happening and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
hile sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
:.(--3serve must moderate the growth of money in order to reduce inflation.
If the Federal .', ?eserve were to try to lower interest rates by expandine
the money supply too aggressively, I am convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit,
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanees in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. .q any rate, it is my fervent hope that we can all look forward to
Ftn improvement in inflation and interest rates before too long.
Sincerely,
iT:ser
#3919
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
fttober 26, 1981
Mt. Kathleen Worth
near Ms. Worth:
Thanks for sending me your letter regarding the effects high
Interest rates are having on housing and its associated industries. I
understand what is happening and I am symnathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strona private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve rust moderate the orowth of money in order to reduce inflation.
If the Federal eserve were to try to lower interest rates by exnanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. !%t any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
3F:sep
#4304
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 26, 1981
Mr. tlilliam R. Yurk
0ear Mr. Yurk:
Thanks for sending me your letter regarding the effects high
interest rates are having on housing and its associated industries. I
understand what is happening and I am syrrathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strone private credit
demands combined with a large Federal deficit at a tire when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit,
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
3F:seP
#4391
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ictober 26, 1981
Is. Pe.giv L. Zimrerman
Dear s. irverman:
Thanks for sendino me your letter regarding the effects high
interest rates are haying on housing and its associated industries. I
!inderstand what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a.
9articu1arly harsh impact on housing and other credit-sensitive industries
'ihile some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strnne private credit
demands combined with a large Federal deficit at a time when the Federal
')eserve rust moderate the growth of money in order to reduce inflation.
If the Federal ^seserve were to try to lower interest rates by expandine
the money sunoly too anoressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however. I do not believe there is any way of avoiding sore of these basic
issues.
t any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lono.
Sincerely,
3F:seo
#4516
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
r. Dan
Adars
Dear mr. Adams:
Thank you for your letter and your expression of surport.
In the face of problems we both recognize, your words of encouragement
are particularly appreciated. It was thouohtful of you to take the
time to write.
'incerely,
v3en'
/43i-;z1
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Rctober 23, 1981
Mr. C. D. Alcorn, Realtor
C. D. Alcorn Agency, Inc.
503 South Main - P.O. Box 4
Sikeston, Missouri 63801
Dear Mr. Alcorn:
Thanks for sending me your letter regarding the effects of high
interest rates on realtors. I understand what is happening and I an
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money sunply too aggressively. I am convinced the resultant increase
in inflationary expectations would lead to even hioher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for husinesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
Issues, rt any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
U'ssen
#3975
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
Dear Mr. Bennett:
I have receiveu your letter requesting that the DIDC
repeal its ruling allowing finders fees to be Paid to *bona
fide* brokers who obtain All Savers Certificates for depository institutions. As you may know, I expressed some concern
about this issue when it was first raised. I too question
whether paying such brokerage fees is consistent with Congress'
intent in passing the legislation proviOing for the All Savers
certificates.
I cannot speak, of course, for my colleagues on the DIDC,
but I for one would be glad to review this ruling. In that
regard, the DIDC members, I am sure, would find it helpful to
have evidence on the impact of the ruling. For example, has
the use of brokers tended to concentrate All Savers funds
in large depository institutions and away from local communities? Any information that your association may have on
this tatter would be useful to the DIDC.
Sincerely,
'Ir. W. C. 3ennett
President
Independent Bankers Association
of America
te,•
1625 Massachusetts Avenue, A •7-7
Washington, D. C. 20036
cc: Mr. Bernard
NB/RFS?slw #5020
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
The Honorable Frank Annunzio
Chairman
Subcommittee on Consumer Affairs
and Coinage
Committee on Banking, Finance
and Urban Affairs
House of Representatives
20515
Washington, D.C.
Dear Chairman Annunzio:
Thank you for sending us your views on the proper
treatment of cash discounts in the staff commentary on Regulation Z. I want to assure you that we both have the same
objective in assuring that all consumers are treated equitably
and fairly. Although the final commentary which has just been
issued (a copy of which is enclosed)ls somewhat different than
what you suggested, I can assure you that we considered your
concerns very carefully. In the end we felt compelled to
adhere to the position that had been proposed for public
comment.
So that you will have the benefit of the staff's
thinking on this issue, I have asked that they prepare the
enclosed discussion of the issue. Although in this case
our views may differ, we always value your advice, and we
hope that you will feel free to continue to provide us with
the benefit of your insight.
Sincerely,
Enclosures
GG:DS:pjt (#V-235)
bcc: Mr. Hurst
Mr. Garwood
Mrs. Mallardi (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ATTACHMENT
"CASH CARD DISCOUNTS"
The cash discount amendments to the Truth in Lending Act provide
that "any discount from the regular price offered by the seller for the
purpose of enducing payment by cash, checks, or other means not involving
the use of an open-end credit plan or a credit card shall not constitute
a finance charge . . . if such discount is offered to all prospective
buyers . . ." (§ 167(b)).
The suggestion has been made that merchants offering discounts
under a "cash card" plan where only members of the plan get the discount
must treat the amount of the discount as a finance charge to credit purchasers who pay full price.
The Regulation Z commentary, on the other
hand, states that merchants may offer special discounts to certain groups
of customers (even if cash payment is also required to get the discount)
without the discount becoming a finance charge to other purchasers.
This
position is based on the fact that there are cash customers (non "cash card"
holders) who pay the same price as credit customers who are members of the
special group ("cash card" holders).
As a result, the discount cannot pro-
perly be considered a cost of credit, a basic test of what constitutes a
finance charge, since the full price is paid both by cash purchasers who
do not belong to the "cash card" plan and credit purchasers.
This position is consistent with the Cash Discount Act.
The act
allows discounts that would otherwise be finance charges to be excluded if
certain conditions are met, including that they be made available to all
prospective purchasers.
However, it does not make finance charges of
discounts that do not otherwise meet the definition.
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Federal Reserve Bank of St. Louis
Discounts that are
-2based purely on whether cash or credit is used fit the definition of finance
charge.
On the other hand, the discount addressed in the commentary is a
discount based upon other criteria -- membership in a particular club or
organization -- that, in addition, requires cash payment.
To the extent
it is the intent of Congress to prohibit a merchant from offering a special
club member discount that requires cash payment, a clear statutory provision
to that affect is probably needed.
It should be noted that a position other than that reflected in
the commentary could cause problems for merchants, consumers, and others
involved in special discount programs, and would probably result in the
discontinuation of the few discount plans of any kind currently available.
This
would appear to frustrate the overall objective of Congress to encourage discounts, and seems at odds with the general desire to reduce regulatory burden.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ictober 23, 1981
Sister lary Arden
St. Joseph ,iospital
Denver, Colorado
Dear sister ,lary:
Thank you for your letter and your expression of support.
In the face of problems we both recoonize, your words of encouragement
are narticularty appreciated. It was thoughtful of you to take the
time to write.
Sincerely,
;;F:s0P
#44W
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 11P1
Ir. R. E. "ate
Sristol Associates
R.O. Sox 3
110.Ho—Kus, 4ew Jersey 17423
lear Mr. Sate:
Thank you for your letter and your expression of support.
In the face of problems we both recognize, your words of encouragerent
are particularly appreciated. It was thouohtful of you to take the
tire to write.
Sincerely,
T:ser:
"41-12
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ictober 23, 1981
'r. • !-A.. Bauman
Dear Mr. Caumen:
Thank you for your letter and your expression of support.
In the face of problems we both recognize, your words of encouragement
are particularly appreciated. It was thoughtful of you to take the
time to write.
Sincerely,
„F:sep
f4270
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
Ms. Renee uerinrin
Buennan Homes
R.1 PI, Highway 23'
,gest
Cold Spring, Minnesota 56320
Dear Ms. Buerman:
Thanks for sending me your letter regarding the effects of high
Interest rates on your home building business. I understand what is happenine
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
leserve must moderate the growth of money in order to reduce inflation.
If the Federal reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to charms in credit markets,
however, I do not believe there is any way of avoidinc some of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too lonn.
Sincerely,
One,
14310
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 19O1
Ms. Lucille P. Cox, Realtor
Cox Realty
4426 1-55 North
Jackson, Mississippi 39211
)ear Ms. Cox:
Thanks for sendine me your letter regarding the effects of high
interest rates on realtors. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on !lousing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strone private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the orowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I em convinced the resultant increase
In inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals 1.,!he are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine sore of these basic
issues. At any rate, it is rly fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 23, 1981
IS, Dorothy Cutter
hear Is. Cutter:
Thank you for your letter sunnestinn that the Federal ''eserve
work to lower interest rates so people can make credit paschases.
The plain fact, however, is that we will not he able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary exnectations. Simply creatinn more money
no,/ would worsen the problem, because inflationary expectations would
surge, leading to still higher interest rates. Restorinn price stability
unavoidably requires restrained monetary and credit grnwth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures on interest rates and credit
markets,
know this has been a difficult period for many people, and it
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
Sincerely,
F:le'
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
••,41, •
Octoter 23, 1981
?be Scucrable George 116 Danielson
Cheirmea, Sehcommittee en Administrative
Lew
Osseesamemtal Relations
Cenoittes on the Jediciary
U.S. ewes at hopresentatives
20515
Wishiegton, D.C.
Doer Ike Choirmans
I sn pleased to submit views responding to the Ixecutive *worries
of'Wm relief prevision conteined in kaia 746, as amended by your
antoommittee. On several occasions in the pest the Board has exprasseC
to the Congress end the Administration consistently strong sapport for
efforts te improve the regulatory process and to enhance public participation
La regulatory procoadiags. I se pleaded to do se enee again.
h.R. 744, as amemded, contain* a ptovisies thigh would allow
the President to des/last* a proposed agency action as a °major tale
thus triggering very envies procedures, such as a eerie* of detailed
and complex cost bemefit analyses. I am very comerned that these new
requireneets would result is a substantial increase in paperwork, additional
costly informational burdens om both the agency involved sad the public,
judicial analleages, amd, meet important, lengthy delays Is adeinietrative
action. It is; my judgmemt that the objectives of regulatory simplification
and avoidance of unnecessary regulation would not be neeepplithed by
an additional layer of administrative requirements. Mosoutive override,
as applied in the "major rule' comeept, would call add still smother
and unnecessary complexity at a tine when we are working towards simplification and streamlining of regulatory rulemating.
Dowever, these is ars additional reason to be concerned *bout
Executive override in the ruismaking process* particulauly with respect
to the operations of the Federal Deserve dpeem,As-I-tece -you ere
aware, the Compress created the-redhgral **serve gyetes is 1913 as an
Independent entity in order to emphasise the insulation of the credit
regulation process from the function of financing the fitANNIMMINItib 1.40,
experience deeonstrates that the separation ed these two flustiess ean
nate a vital, conttibutiOa to a more stable sad effective denoWdeeseetery
system, Therefore, I meld he particularly eroserned about Narcotise
override as applied to the functions of the Federal heserve System.
This is not only tree Mousse ed the breed policy esesiderstimma
I have jest outlined, Out aloe beesese ime the feet that this weld run
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Federal Reserve Bank of St. Louis
lbe lismisteigo !sores s. Dealelsoo
Pepe 'um
directly counter to one of the major objectives that CoMprOOO SOOltt
to achieve in creating specialised agencies. The sightlisset simmileto
that the ibmoutive would readies oodles the override 00=0,4 to interfere
in the regulatory promo meld silmitiosetly defeat the 1011,044, of
assuring regulation hosed so smpest judgment oo the merits of both general
policy and particular canoe.
Because of the sigmifisamett of the Snocutive override provisions
I have limited ny comments is this letter to this provision. Additional
consents on other aspects of the bill will be submitted separately.
Sincerely,
Waal Mc*
MB:NZAHMOmo
10/23/81
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ctober 23, 1981
Mr. Don 0auber
Dear Ir. Dauber:
Thank you for your letter and your expression of support.
In the face of problems we both recopnize, your words of encouragement
are particularly appreciated. It was thoughtful of you to take the
time to write.
Sincerely,
•F:se
14
https://fraser.stlouisfed.org
6
Federal Reserve Bank of St. Louis
October 23, 1981
Mr. David Ehler
Ehler's building Service
1817 north 24th Street
Sheboygan, Wisconsin 53081
Dear Mr. Ehler:
Thanks for sending me your letter regarding the effect of high
interest rates on the housing market. I understand what is happening and
I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
5Fts0P
$246
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
nctober 23, PVI
Ir. Arthur E. Foster, President
Foster Bros., Inc.
3990 University )rive
Fairfax, Virginia 22030
!)ear lr. Foster:
Thanks for sendine me your letter regarding the effects high
interest rates are having on your home construction business. I understand
what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
7seserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply ton aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely.
'A24
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
Mr. G. Granson Geis, P.L.S.
Residential Devel opment MA nAger
Krehbiel Associ ates, Inc.
1870 Aiagara Falls 3oulevard
Tonawanda, ;e-w York 14150
Dear Mr, Geis:
Thank you for your letter urging
rates now,
to work to lower interest
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
in inflation and inflationary exPectations. Simply creating more money
now would worsen the problem, because inflationary exnectations would
surge, leadino to still higher interest rates. Restorine price stability
unavoidably requires restrained monetary and credit growth.
our efforts And those of the Coneress and the Adrinistration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in government spending and the
federal deficit will help to ease pressures en interest rates and credit
know this has been a difficult period for many neople, and it
markets,
is our fervent wish that things will be better for all of us in the future.
Thank you for writing.
incerely,
3F:ser
ouln
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
9ctober 21, 1991
r. Gerald Goodman
Gerald Goodman g Associates
6303 Indian School, 1.E.
Albuquerque, New Mexico 87110
Dear Mr. Goodman:
Thank you for your letter and your expression of support.
In the face of problems we both recognize, your words of encouraoement
are particularly appreciated. It was thoughtful of you to take the
tire to write.
Sincerely,
,F:seo
J4421
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
Mr. Sidney J. Goodstein
Good Realty Company
56 li. Lancaster avenue
Paoli, Pennsylvania 19301
Llear tir. Goodstein:
Thanks for sending me your letter maintaining: that the housinc
industry is being "placed in jeopardy" by the high interest rates. I
understand what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong nrivate credit
demands combined with a large Federal deficit at a time when the Federal
Reserve rust moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the roney supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding som of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
F sep
t'3933
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a
October 23, 1981
Dear Bill:
I appreciate your letter -- but I am
writing mainly to say I now know a little
more about the bicycle market. It's a
delight to see a business and a company
beat back foreign competition.
Sincerely,
Mr. W. M. Hannon
Chairman of the Board
Chief Executive Officer
The Murray Ohio Manufacturing Co.
P.O. Box 268
Brentwood, Tennessee 37027
PAV:ccm
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
_)ctober 23, 1981
praiser
Mr. J. Richard Krizo„
J. R. Krizo !Pi Associates
26 "H" Street
Bakersfield, California 93304
Dear mr.
Thanks for sending me your letter regarding the effects of high
interest rates on housing. I understand what is happening and I an
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
earticularly harsh imnact on housine and other credit-sensitive industries
,.1hile some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of stronn nrivate credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by exnandino
the money supply too aggressively, I an convinced the resultant increase
in inflationary expectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I knew this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to chanties in credit markets,
however, I do not believe there is any way of avoidine sore of these basic
Issues, At any rate, it is try fervent hope that we can all look forward to
an inprovement in inflation and interest rates before too lono.
Sincerely,
F:sop
e4oza
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
Robert
Lacey III
r)ear Ir. Lacey:
Thank you for your letter and your expression of support.
In the face of problers we both recognize, your words of encouragement
are particularly appreciated. It Ilas thoughtful of you to take the
tire to write.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
9nceroly,
ctober 23, 1981
Mr. Theodore E. Lee
near Mr. Lee:
Thank you for your letter and your expression of suoport.
In the face of problems we both recognize, your words of encouragement
are particularly appreciated. It was thoughtful of you to take the
time to write.
Sincerely,
34425
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23,
1
Mr. Bill Lunsford
Capstone Real Estate ERA
1212 15th Street East
Tuscaloosa, Alabama 354c111
Dear Mr, Lunsford:
Thanks for sending me your letter regarding the effects of high
interest rates on realtors. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
‘ihile sore other sectors of the economy have been relatively unaffected.
CLirrent interest rates, however, are a reflection of strong private credit
demands combined with a larqe Federal deficit at a time when the Federal
7- serve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expandino
the money sunply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidino some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lono.
Sin cc rely,
.01. 4)7.2
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
f.'7ctober 23. 1981
?Ir. Peter Markos
`)ear Mr. Markos:
Thank you for your rilailgram urting that "somethino. be done" to
lower the high interest rates.
The plain fact, however, is that we will not be able to have
sustained lower interest rates until we bring about a sustained reduction
In inflation and inflationary expectations. Simply creating more money
now would worsen the problem., because inflationary expectations would
surge, leading to still higher interest rates. Restoring price stability
unavoidably requires restrained monetary and credit growth.
As our efforts and those of the Congress and the Administration
to reduce inflation take hold, our hope is that we all can look forward to
lower interest rates. Certainly reductions in rovernment spending and the
federal deficit will help to ease pressures on interest rates and credit
markets. We know this has been a difficult period for many people, and it
Is our fervent wish that things will be better for all of us in the future.
Thank you for writino.
Sincerely,
•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
Mr. John Mattingly
John L. Mattingly Construction
1311 5-2
Port Tobacco, Maryland 20677
Dear Mr. Mattingly:
Thanks for sendinn me your letter regardino the effects of high
interest rates on yours and other hone building businesses. I understand
what is happeninn and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on housino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with e large Federal deficit at a tire when the Federal
.'eserve must moderate the orowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aagressively, I am convinced the resultant increase
in inflationary exnectations would lead to even hinher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
In
,r:sert
04111
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
flctober 23, 1981
!Ir. Howell Patton III
Patton Realty
400 North :lain Street
Franklin, Kentucky 42134
Dear !Ir. Patton:
Thanks for sendino me your letter regarding the effects of high
Interest rates on realtors. I understand what is happening and I ar
sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
Particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strono private credit
demands combined with a lane Federal deficit at a time when the Federal
Rserve must roderate the orowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money simply too aogressively, I am convinced the resultant increase
in inflationary expectations would lead to even hioher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanoes in credit markets,
)owever, I do not believe there is any way of avoidino some of these basic
issues. t any rate, it is my fervent hope that we can all look forward to
an iraorovenent in inflation and interest rates before too lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
ictober 23, 19f1
Mr. John !I. Pettit, President
Pettit ?1 Griffin, Inc.
50 Ilest Montgomery Avenue - Suite 30r)
Rockville, Maryland 20850
Dear %Ir. Pettit:
Thanks for sending me your letter regarding the effects high interest
rates on your home building business. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Peserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary exPectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however. I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonc.
F,incerely,
4:sep
4'3928
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lctob r 23, 1Q81
Ms. Jane P. Prikett
Miraron Realty
1400 Cause roulevard
Slidell, Louisiana 70458
')ear Is. Prikett:
Thanks for sending, me your letter regarding the effects of high
interest rates on realtors. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on housino and other credit-sensitive industries
while sore other sectors of the econory have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands corbined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by exoanding
the money supoly too aggressively, I an convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
roderal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an .immvement in inflation and interest rates before too lone.
Sincerely,
i;F:stitP
44414
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ictober 23, 1181
3everly 3, Prine
Dear Ms. Prine:
Thanks for sending me your letter regardine the effects of high
interest rates on your real estate business. I understand ,,hat is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strone private credit
demands combined with a laree Federal deficit at a tire when the Federal
7eserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money sunply too aggressively, I am convinced the resultant increase
in inflationary expectations would lend to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look fordard to
an improvement in inflation and interest rates before too lona.
sincerely,
,"4347
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1991
!Ir. James H. Ramaker
Dear
Ranaker:
Thank you for your letter and your expression of support.
In the face of problems we both recognize, your words of encouragement
are particularly appreciated. It was thoughtful of you to take the
time to write.
Sincerely,
44281
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Octiober 23, 1981
Mr. Pepe Rivera
Asociacion de Bancos
de Puerto Rico
Banco Popular Center
Oficina 820
Hato Rey, Puerto Rico 00918
Dear Pepe:
Many thanks for the cigars.
I was
sorry that I didn't get to see you in
San Francisco. My
one.
trip was a very quick
Hope to see you soon.
Sincerely,
CCM
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
'Ir. R. C. Roea
Dear Mr. Rosa:
Thank you for your letter and your expression of support.
In the face of problers we both recognize, your words of encouragement
are particularly appreciated. It was thoughtful of you to take the
time to write.
Sincerely,
3F:sep
44396
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Dctober 23, 1981
Mr. C. F. Rudesill, President
Riverside Companies
120 N. Kinoshightqay - P.D. !3ox 739
Cape Girardeau, !Iissouri 63701
Dear Mr, Redesill:
Thank for sendino me your letter regarding the effects of high
interest rates on housing and its associated industries. I understand what is
happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh imnact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too acrressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. .;\.t any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 23, 1981
Mr. lussell J. St Clair
Dear Mr. St Clair:
Thank you for your letter and your expression of support.
In the face of problers we both recognize, your words of encouragement
are particularly appreciated. It was thoughtful of you to take the
time to write.
Sincerely,
BF:sep
#4394
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'7ctober 23, 1981
9r M1liarR. Saner
Dear !Ir. Saner:
Thank you for your letter and your expression of supoort.
In the face of problems we both recoonize, your words of encouragement
are particularly appreciated. It was thoughtful of you to take the
time to write.
Sincerely.
CT:cep
#4434
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
Mr. Oene Scites
3ear Mr. Scites:
Thank you for your letter and your expression of support.
In the face of problems we both recognize, your words of encouragement
are particularly appreciated. It was thouphtful of you to take the
time to write.
Sincerely,
tT:sep
#4323
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
Mr. Robert
Stuck
Dear Mr. Stuck:
Thanks for sending me your letter regarding, the effects of high
interest rates on home buyers and sellers. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housino and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
ic_niands combined with a laroe Federal deficit at A time when the Federal
"(nerve must moderate the orowth ef money in order to reduce inflation.
If the Federal reserve were to try to lower interest rates by expandino
the money supply too aooressively, I an convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look fon4ard to
an improvement in inflation and interest rates before too long.
Srisfils
03999
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1981
r. Daniel L. Turner, CPP,
Dear lr. Turner:
ThAnk you for your postcard and your expression of support.
In the face of problems we both recognize, your words of encouragement
are particularly appreciated. It was thoughtful of you to take the
time to write.
vAncerely,
UF:sep
0433
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 19,4
Mr. Phil "Jeddle
Monsanto
P.n. .3ox 174
Luling, Louisiana
7q070
Dear vr. 'toddle:
Thank you for your poem and your exoression of support.
In the face of problems we both recognize, your words of encouragement
are oarticularly appreciated. It was thoughtful of you to take the
tine to write.
Sincerely,
*F:sen
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 19S1
Mr. Leonard !Jeksler
Lencrest Developments
16255 Ventura i;oulevard
Encino, California 91436
Dear "r. teksler:
Thanks for sending me your r:ailgram expressing your feelings about
the effects of high interest rates ondhousing. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong nrivate credit
demands corbined with a large Federal deficit at A time when the Federal
e.serve must moderate the orowth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply ton agaressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are narticularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
1F:stp
13'135
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
.41.144w,
October 23, 1981
Mr. Clyde L. Wells, Jr.
Son Builders
R.D, f4, Box 265-A
Blairsville, Pennsylvania
15717
3ear Mr. Wells:
Thanks for sending me your letter regarding the effects of high
interelt rates on home builders. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while sore other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by expanding
the money supply too aggressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
8F:seo
#3973
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
fictober 22, 1981
Mr. Frank Gai 1 ey. Manager
1verhead Door Company of Little Rock, Inc.
2312 Cantrell Road
Little Rock, Arkansas 72202
Dear Mr. Bailey:
Thank you for your letter regarding the effects high interest
rates are having on the small business corrounity. I understand what is
happening and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
narticularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong nrivate credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the arowth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too anoressively. I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets.
however, I do not believe there is any way of avoidino sore of these basic
issues. Pt any rate, it is my fervent hone that we can all look forwar0 to
an improvement in inflation and interest rates ilefore too lonn.
sincerely,
;7117
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Charles F. Bernhardt, President
Bernhardt and Taylor, Inc.
700 Research Road
Richmond, Virginia 23235
Jear Mr. Bernhardt:
Thank you for your letter regarding the effects of high interest
rates on housing and its associated industries. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong Private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
roderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hieher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely.
AF:seP
#4168
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
r. Orvis L. Berry
Executive Vice President
Great Lakes Federal Savings
15 Capital Avenue, N.E.
Battle Creek, Michigan 49016
Dear Mr. Berry:
Thank you for your letter concerning the condition of savings and
loans.
The Federal Reserve and other financial regulatory agencies are
'veil aware of the difficult times facing the thrift industry, and we are
inonitoring developments closely. As you know, the current high interest rate
environment places any institution with a large portfolio of fixed rate longterm assets in a very difficult position. The only really satisfactory solution is
to have the efforts of the Federal Reserve, the Administration, and the
Congress to reduce inflation become effective, for that will produce the
environment for a sustained reduction in interest rates.
However, there is no avoiding the fact that until that happens
many thrift institutions will be under severe pressure. As you know, Congress
and the regulatory agencies are actively assessing transitional measures
designed to help thrift institutions better weather the period until interest rates
come down and I appreciate your thoughts and concerns.
Sincerely,
F:evjj
112789
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Dorothy Saunders
•
October 22, 1981
Mr. Ronald G. Blissett
alissett Hones, Incorporated
1843 Ross Clark Circle
Dothan, Alabama 36301
Dear Mr. Blissett:
Thank you for your letter regarding the iffects high interest rates
have had on your construction business. I understand what is happening
and I am symnathetic to your concerns.
The current level of interest rates is undoubtedly havinn a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strono private credit demands combined
with a lame Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supnly
too ageressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
5F:sep
#4157
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 72, 1981
Mr. Kerry 3ullineton
Kerry 3ullington Construction Co.
P.% P,ox 58
Franklin, Kentucky 42134
Dear Mr. Bullinnton:
Thank you for your letter renording the effects hiah interest
sates are havine on yours and other businesses directly affected by changes
in credit market condttions. I understand what is happening and I an
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of stronn private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the orowth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandinn the money supply
too arnressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avoidino some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an irproverent in inflation and interest rates before too long.
Sincerely,
eF:sep
A.056
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
netoher 22, 1921
Mr. Fred Choate
')ear Mr. Choate:
Thank you for your letter regarding the effects high interest rates
have had on the building company you work for. I understand what is happening
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
garticularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong Private credit demands combined
,rith a lame Federal deficit at a tire when the Federal reserve must
roderate the growth of money in order to reduce inflation. If the Federal
Peserve were to try to lower interest rates by Pxnandinv the money supnly
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an Improvement in inflation and interest rates before too long.
Sincerely,
F:sec
;'1171f?,2
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ctober 22, 1981
Mr, Bruce P. Crary
Uruce Crary Lincoln-liercury-Saab
222 !lest Las Tunas Drive
San Gabriel, California 91776
Dear mr. Crary:
Thank you for your letter regarding the effects of high interest
rates on automobile dealers. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strain private credit demands combined
with a large Federal deficit at a tine when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
7!eservev,ere to try to lower interest rates by exnandine the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hieher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
know this may sound a bit abstract for businesses and
individuals who are perticularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 22, 1981
Mr. J. C. Crinaan, P.Eng.
Dear Mr. Cringan:
Thank you for your letter and sugaestions and your expression
of support. In the face of problems we both recognize, your words of
encouragement are particularly appreciated. It was thoughtful of you
to take the time to write.
You and I are basically in accord regarding the need for
further reductions in the Federal budget. The Federal Reserve has
long maintained that no anti-inflation program can be successful in
a climate of deficit spending. The Administration has proposed many
and realized some essential budget cuts. As these fiscal measures
take hold, alone with the monetary policies of the Federal Reserve,
it is my fervent hone that we can all look forward to an improvement
in inflation and interest rates before too long.
Sincerely,
cc: Sandy Wolfe (2)
Dorothy Saunders
BFisher:nlf
10/22/81
#3944
https://fraser.stlouisfed.org
MINIE•mommao..-•-,
Federal Reserve Bank of St. Louis
1114..
u. a-N)
BOARD OF GOVERNORS
OF THE
•0
• -n
•.(24A9L RE.S . •
• - ...• •
FEDERAL RESERVE SYSTEM
WASHMGTON, D. L. 20551
•
•
October 22, 1981
PAUL A. VOLCKER
CHAIRMAN
The Honorable Alfonse D'Amato
United States Senate
20510
Washington, D.C.
Dear Senator D'Amato:
Thank you for your letter of September 23 requesting
comment on S. 1508, which would exempt time deposits of international banking facilities (IBFs) from deposit insurance and
insurance assessments under the Federal Deposit Insurance Act.
Before commenting on the specific provisions of S. 1508,
I would like to reemphasize that the Board believes that the
establishment of IBFs at United States banking offices will
enhance the international competitive position of banking
institutions located in the United States and in addition,
hopefully, increase domestic employment in the financial sector
of the economy. Accordingly, the Board takes a major interest
in legislation, such as yours, aimed at improving the operating
effectiveness of the IBFs.
Basic to our analysis of S. 1508 is the fact that
IBFs are intended to operate in a similar manner to offshore
branches currently employed by institutions operating in the
United States. A natural and logical consequence of this concept is to approach the treatment of IBF deposits as foreign
deposits for purposes of both deposit insurance and insurance
assessments. Under present law, deposits at foreign branches
of U.S. banks are not now subject to insurance or insurance
assessment, accordingly, I feel that it is both appropriate
and necessary that similar treatment should be accorded to
IBF deposits. Should,in the future, a compelling case be made
for the application of deposit insurance to overseas deposits
of branches of U.S. banks, then it would follow that deposit
insurance and insurance assessments should be applied to IBF
deposits.
I would also point out two considerations which played
a significant role in the Board's analysis of the proposal
contained in S. 1508--the first relates to the need for deposit
insurance and the second affects the competitive impact of
insurance assessments. On the first point, I would note that
IBF deposits must be in minimum denominations of $100,000, and
in almost all cases would be expected to exceed the maximum
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The Honorable Alfonse D'Amato
Page Two
level of deposit insurance. Also, depositors with resources
of this magnitude are not generally in the class that needs
the protection of deposit insurance, but are more in the
category of the sophisticated investors able to protect their
interests through knowledge of the marketplace.
On the second point, as you point out in your statement on the bill, the international financial marketplace is
highly competitive and the imposition of insurance assessments
on IBF deposits would put U.S. banks at a competitive disadvantage
against their foreign counterparts who are not subject to this
cost. This factor was also one of the reasons for the P",ard's
decision to exempt IBF deposits from reserve requirements.
As you again point out, the narrow margins in international
markets make it all the more important to avoid putting the
branches of U.S. banks at a competitive disadvantage, especially
when the extra costs could impair their ability to compete.
Thus, I believe, it is both necessary and desirable
to exclude IBF deposits from deposit insurance and assessment.
However, to assure equality of treatment for both IDE' and
foreign deposits, it would be desirable to draft the proposed
legislative action to provide the same treatment for IBF deposits
as for the foreign deposits of the branches of United States
banks.
I hope you will find these comments useful in your
further consideration of this legislation.
Sincerely,
MB:PSP:DS:pjt (#1-274)
bcc: Mr. Bradfield
Mr. Pilecki
Mrs. Mallardi (2)
Legal Records(2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Leonard D. Deloplaine
Dear Mr. Deloplaine:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
armij
1113536
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Dctober 22, 1981
Dells Industries, Inc.
Dear (entlemen:
Thank you for your letters regarding the effects of high interest
rates on the small business community. I understand what is happening and
I am symnathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands corbined
with a laroe Federal deficit at a time when the Federal Peserve must
roderate the orowth of money in order to reduce inflation. If the Federal
:-eserve were to try to lower interest rates by expandino the money supply
too aggressively, I am convinced the resultant increase in inflationary
exnectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 22, 1981
Mr. Rick Diz
Vice President
Roper Bros. Lumber Co., Inc.
130 Pocahontas Street
P.O. Box 630
Petersburg, Virginia 23803
Dear Mr. Diz:
I have received your letter that we gradually ease our policy of
monetary restraint to bring about a slow moderation in interest rates. I can
understand your concern, but I believe abandoning our policy of monetary
restraint would ultimately harm rather than help businesses and individuals
vulnerable to changes in credit market conditions.
I recognize that current money market conditions have caused
serious problems for certain segments of the economy. It is important,
however, that you recognize what the consequences would be if we attempted
to lower interest rates by allowing money and credit to grow too rapidly.
Excessive growth in money would adversely affect inflation and inflationary
expectations, a principal ingredient of high interest rates. When lenders expect
continued high inflation, they are naturally reluctant to commit funds without
being compensated for the expected declining value of the dollars they will
receive in payment. Thus the result of an excessive expansion in the money
supply would be higher not lower interest rates.
Current high interest rates reflect strong private demands for
credit, combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth in money and credit to
bring inflation under control. Your suggestion, though well intended, would
serve to aggravate inflation, eventually causing still higher interest rates and
worse economic conditions.
I believe our monetary policy, complemented by proper fiscal
initiatives of the Administration and Congress, is the best hope for attaining
stable prices, lower interest rates and a healthier economy for all of us. As
these policies take hold, it is my fervent hope and belief that we can all look
forward to lower inflation and lower interest rates.
Thank you for taking the time to express your view.
Sincerely,
BF:ev jj
#3694
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1PR1
Dunn and Son Properties
"fear Sirs:
Thank you for your wire regarding the effects of high interest
rates on the small business comunity. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly havfne a
particularly harsh impact on credit-sensitive industries while sone other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strone nrivate credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by exnandino the money supply
too aogressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding S MP of these basic
issues. At any rate, it is my fervent hope that we can all look forwarc.I to
an improvement in inflation and interest rates before too lone.
Sincerely,
eF:sep
417
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Donald M. Gale, President
Gale Plumbing, Inc.
Rt. 2 - Box 2428[
Kennewick, Washington 99336
Dear Mr. Gale:
Thank you for your letter regarding the effects high interest
rates have had on your plumbine business. I understand what is happening
and I an syrpathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh irpact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the nrowth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
exoectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine sore of these basic
issues. At any rate, it is my fervent hooe that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
ger
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Douglas E. Gratias, President
Affordable Homes, Inc.
Gratias Construction, Inc.
R.R. 1, 3ox 106
Waukee, Iowa 50263
Dear tir. Gratias:
Thank you for your letter regarding the effects of high interest
rates on the building industry. I understand what is happening and I ar
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been. relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order tp reduce inflation. If the Federal
Peserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improverent in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 22, 19E1
Mr. Amos Hill
Dear Mr. 11411:
Thank you for your postcard regarding the effects of high interest
rates on builders. I understand what is happening and I am sympathetic to
your concerns.
The current level of interest rates is undoubtedly havine a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonn,
Sincerely,
OPASOP
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Ray F. Gall!, Jr.
President
Gall! Builders, Inc.
778 El Camino Real
San Carlos, California 94070
Dear Mr. Galli:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BFsev jj
113153
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1%1
Mr. William H. Gilk
G & R Aircraft Sales, Inc.
13601 Pioneer Trail
Eden Prairie, Minnesota 55344
Dear Mr. Gilk:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money apply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BF:evjj
V3163
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
e•c,*4& veSefusemibioer-14, 1981
Ms. Nancy B. Harris
Dear Ms. Harris:
Thank you for your postcard asking about the effects of money
market mutual funds on the economy. We at the Federal Reserve understand
the concerns that prompted your message.
The question you raised about money market mutual funds is an
important one involving several complicated and conflicting considerations.
Money market funds have grown rapidly. Being free from many constraints to
which banks and thrift institutions are subject, particularly interest rate
ceilings, a significant portion of the money flowing into these funds has been
diverted from depository institutions.
It is apparent that the availability of these funds has benefited
investors, but there are obvious costs. The money funds, tend, for example, to
divert resources from smaller banks and thrifts, in effect channeling money
away from borrowers dependent on these institutions. This is a matter of
concern to the Federal Reserve, as we do not take lightly the erosion of the
competitive position of our banks and thrifts or of regulatory coverage. Also,
with continued rapid growth, these funds and other new instruments could make
monetary policy more difficult to implement.
The government is taking a number of steps to reduce regulation
of banks and thrift institutions. Most significantly, Congress has charged the
Depository Institutions Deregulation Committee to remove interest rate
ceilings on time and savings deposits over the next several years. These steps
should, over time, improve the competitive position of traditional depository
institutions, but there are legal and practical limits on the speed of change in
this area.
In this circumstance there are those who call for imposition of
stringent regulation on money market funds. However, this approach would
significantly penalize savers, and we think it is important to maintain
attractive incentives for saving. At another extreme, there is a temptation for
government to do nothing at all.
This course involves some potential
disadvantages for small businesses and other borrowers dependent on non-money
center banks. It would, as well, lead to an erosion of the Federal Reserve's
ability to interpret monetary data and to control the money supply.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
Page Two
The Federal Reserve has proposed an approach designed to (I)
provide the framework for fair competition between the money market mutual
funds and established depository institutions,(2) protect against erosions in our
ability to measure and control money stock, and (3) maintain attractive
incentives for saving. Simply stated, that proposal involves the extension of
Federal Reserve requirements to a portion of these funds that correspond most
closely to transactions or checking accounts. It would not affect investments in
money funds to the extent they more closely resemble personal savings, because
as mentioned we believe it is important to encourage personal savings, and it
would not entail extension of other banking regulations for these funds. In
time, as interest rate ceilings are phased out, and as the constellation of
interest rates change, the relative advantages and disadvantages of money
market funds vis-a-vis depository institutions would reflect market
competition. Meanwhile individuals and businesses would continue to have a
full range of investment choices.
This proposal is straightforward and simple. It is not an effort to
turn back the clock or stifle a new institution in any sense, but to provide a
logical framework for the evolution of the nation's financial system compatible
with the needs of public policy.
I am sure you will understand that much more could be said about
so complex a subject, and I appreciate your interest.
Sincerely,
3F:evjj
#3502
cc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sandy Wolfe
Dorothy Saunders
!T)ctober 22, 191
°Ir. Ralph Johns
Dear Mr. Johns:
Thank you for your letter regarding the effects of high interest
rates on the snail business community, I understand what is happenine and
I are sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore ether
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strono private credit derands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the erowth of money in order to reduce inflation. If the Federal
Peserve were to try to lower interest rates by expanding the money supply
too aggressively, I an convinced the resultant increase in inflationary
expectations would lead to even higher interest rtes. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals Olo are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
T:e.;ee
,Are
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
me. Joseph P. Johnson
Executive Vice President
Home Builders Association of Delaware, Inc.
2601 Annand Drive - Suite 20
Heritage Professional Plaza
Wilmington, Delaware 19808
Dear Mr. Johnson:
Thank you for your letter regarding the effects of high interest
rates on the building industry. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh Impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of stronp private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
7,eserve were to try to lower interest rates by expandino the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sort of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
UF:sep
#4025
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 19D,1
Mr. Tor, Johnson
Vice President and Oe.neral !!anacie.r
F; Ps 6 Roofing
4159 santa Rosa Avenue
Santa Rosa, California 95401
Dear r. Johnson:
Thank you for your letter renanline the effects of high interest
rates on housing and its associated industries. I understend what is hapnonine
and I am sympathetic to your concerns.
The current level of interest rates is undnubtedly havine a
particularly harsh impact on credit-sensitive industries while sore other
sectcrs of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strone private credit demands ccrbined
with a large Federal deficit At a time when the Federal Reserve must
Inderate the erowth of money in order to reduce inflation. If the Federal
Deserve were to try to lower interest rates by exPandine the money supply
too aggressively, I an convinced the resultant increase in inflationary
expectations would lead to even hieher interest rates. The only solution
see in the short run is further action to reduce the Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
r•
•
et,
a,'
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ctober 22, 191
Jeffrey Kauffmann
iiometown Builders, Inc.
5744 Logan Avenue Aorth
!>rroklyn Center, !linnesota
55431
Dear Mr. Kauffmann:
Thank you for your letter regarding the effects of high interest
hetic to
rates on builders. I understand what is happening. and I an sympat
your concerns.
The current level of interest rates is undoubtedly havinn a
other
Particularly harsh iroact on credit-sensitive industries while some
st
t
intere
Curren
cted.
unaffe
vely
relati
sectors of the economy have been
ed
combin
s
demand
credit
e
privat
rates, however, are a reflection of strono
rust
Reserve
Federal
the
when
with a larne Federal deficit at a time
the Federal
rooderate the growth of money in order to reduce inflation. If
supply
money
the
ino
expand
by
fleserve were to try to lower interest r3tes
ionary
inflat
in
se
increa
ant
too aggressively, I am convinced the result
only solution
expectations would lead to even hinher interest rates. The
deficit.
Federal
the
reduce
I see in the short run is further action to
I know this may sound a bit abstract for businesses and
markets,
individuals -rho are particularly vulnerable to changes in credit
basic
these
of
some
ng
however, I do not believe there is any way of avoidi
d to
forwar
look
all
issues. At any rate, it is my fervent hope that we can
long.
an improvement in inflation and interest rates before too
Sincerely,
It
4:se2
44123
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mb
October 22, 1981
Mr. Peter E. Kingsley, President
Pete Kingsley Builder, Inc.
382K Hill Top Road
Strasburg, Pennsylvania 17579
Dear Mr, Kingsley:
Thank you for your letter regarding the effects of high interest
rates on builders. I understand what is happening and I am sympathetic to
your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding SOW of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
4:1
7
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
9ctober 22, 1981
Mr. Marvin G. Klueffer
Dear Mr. Klueffer:
Thank you for your letter regardino the effects of high interest
rates on the heating and air conditioning business you work for. I understand what is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong orivate credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chances in credit markets,
however, 1 do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
r:Sen
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Denny Limpus
Dear Mr. Limpus:
Thank you for your letter regarding the effects of high interest
rates on the construction and building supplies industries. I understand
what is happe.ninn and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
eF:ser
04077
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Jules Lippert
Vice President
Hilton Lifetime Homes Corporation
36 Glenola Drive
P.O. Box 69
Leola, Pennsylvania 17540
Dear Mr. Lippert:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
liFtevjj
13023
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Or. James L. Lowe, Jr.
Mark IV Homes, Inc.
6945 Highway 18 lest
Jackson, zIssissippi 39299
Dear Mr. Lowe:
Thank you for your letter regarding the effects high interest
rates have had on your building business. I understand what is happenino
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of stronn Private credit demands combined
with a laroe Federal deficit at a tire when the Federal eserve must
moderate the growth of money in order to reduce inflation. If the Federal
ReservP were to try to lower interest rates by exnandine the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hioher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
Individuals who are particularly vulnerable to channes in credit markets,
however, I do not believe there is any way of avnidino some of these basic
Issues. At any rate, it is my fervent hope that we cpn all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 22. 191
r. T;obert
McCoy, Office Manager
1;. L. Cubba,7e, Inc.
4032 Tilliamsburg Court
Fairfax, Virginia 22039
'ear mr. McCoy:
Thank you for your letter regarding the effects high interest
rates have had on your building business. I understand what is happening
and I am syrpathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a larre Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Qeserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidine sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an imrnverent in inflation and interest rates before too ion".
Sincerely,
0:sep
04017
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Howard D. Mills, Jr.
mills Heights, Inc.
426 Silver Lake-Scotchtown Road
Middletown, New York 10940
Dear mr. Mills:
Thank you for your letter regarding the effects of high interest
rates on builders. I understand what is happening and I am sympathetic to
your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
OF:sep
44184
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. ilowel Mole, President
Add-A-Roar Construction Co., Inc.
12500 Millstream Drive
Bowie, Maryland 20715
Deer Mr. Mole:
Thank you for your letter regarding the effects high interest
rates have had on your building business. I understand what is happenigr
and I arr syroathetic to your concerns.
The current level of interest rates is undoubtedly havino a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a laree Federal deficit at a time when the Federal Reserve must
moderate the growth of r.ne.y in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too agoressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
T. see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward tr.
an improvement in inflation and interest rates before too lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely.
October 22, 1981
Mr. Terry A. Monson, President
Monson Construction Co., Inc.
6402 Odana Road
Madison, Wisconsin 53719
Dear mr. Monson:
Thank you for your letter regarding the effects of high interest
rates on the construction industry. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undnubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by exnanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can, all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
PF:sep
#$4100
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Ms. Toni E. Moore
Dear Ms. Moore:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
113620
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. M Morse, Sales Manager
A. R. Hamm quarrys, Inc.
iiox 17
Perry, Kansas 66073
Dear Mr. Morse:
Thank you for your letter regardino the effects high interest
rates have had on your building business. I understand what is happening
and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong nrivate credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even hinher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanoes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lonr.i.
Sincerely,
!41'3
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 19R1
Mr. Robert E. Murphy, President
Midwest Pipe & Supply Co., Inc.
1657 Victor Avenue
Columbus, 0hio 43207
Dear "r. Murphy:
Thank you for your further letter regarding the vulnerability
of the small business community to high interest rates. I understand
what is happening and I am syrnathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffPcted. Current interest
rates, however, Are a reflection of stronr private credit demands combined
with a larre Federal deficit at a time when the Federal Reserve rust
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by exoandinr the money sunply
too anoressively, I am convinced the resultant increase in inflationary
expectations would lead to even hirher interest rates. The only solution
I see in the short run is further Action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are rarticularly vulnerable to chanres in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
.F:sfrs;
13;77
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Michael L. Murray
Concrete Contractors, Inc.
F327 lorthwest 10th
Oklahoma,City, Oklahoma 73127
near
r, Murray:
Thank you for your letter regarding the effects of high interest
rates on the building industry. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly hevino a
particularly harsh irract on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strono private credit demands combined
with a lame Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflatiorary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improverent in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 22, 1981
mr. Douglas Nick
Century 21/Rollie Ilinter, Realtors
3003 .1 4. College Avenue
Appleton, 'lisconsin 54911
Dear Mr. lick:
Thank you for your letter regarding the effects of high interest
rates on realtors and the small business comiaunity. I understand what is
happening and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong nrivate credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an irproverrent in inflation and interest rates before too lone.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
c,incerely,
',ktohpr 22, 1,7g1
Mr. Mike Owen, General Manager
Slaughter Industries, Inc.
P.O. 3ox 38566
10851 Miller Road
Dallas, Texas 75238
Dear r, Owen:
Thank you for your letter regarding the effects high interest
rates have had on your business. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a tire when the Federal Reserve must
roderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandino the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract fnr businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 22, 1981
The Paducah Board of Realtors, Inc.
P.O. Box 263
Paducah, Kentucky 42001
Gentlemen:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BF:evjj
#2707
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. T. C. Phillips
Dear Mr. Phillips:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
rn isconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
The Federal Reserve is keenly aware of the problems faced by
American farmers in their attempts to finance their agricultural operations.
We recognize the value of the farming community and the contributions it has
made to the nation.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
jj
13546
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Gary Purvine
P.O. Box 163
Troutdale, Oregon
97160
Dear Mr. Purvine:
Thank you for your letter regarding the effects of high interest
rates on builders. I understand what is happening and I am sympathetic to
your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandinp the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidinp some of these basic
Issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
aF:ser;
O4?%,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Bill Raper
P.O. Box 291
Rockyface, Georgia 30740-0291
Dear Mr. Raper:
Thank you for your postcard regarding the relationship between
interest rates and the Consumer Price Index. I am aware of the problems high
interest rates have caused, and I understand the concerns that prompted you to
write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
BF:evjj
#2812
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1ctober 22, 1981
Ms. Katherine A. Reeves
Century 21/Surf Realty
698 Macro Bay Boulevard
Morro Bay, California 93442
Dear r1r. Reeves:
Thank you for your letter regarding the effects of high interest
rates on the small business community. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
narticularly harsh irpact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit derands cothined
with a large Federal deficit at a time when the Federal Reserve rust
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a !)it abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however. I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
MI=OW_
nctober 22, 1981
Mr. Donald R. Reierson
Donald R. Reierson Custom Hones
3324 Creekview Terrace
minnetonka, linnesota 55343
Dear mr. Reierson:
Thanks for sending me your letter requesting an explanation for the
Federal Reserve's current monetary policy, and why easing monetary controls
would lead to more inflation. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and ether credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
Reserve must moderate the growth of money in order to reduce inflation.
If the Federal Reserve were to try to lower interest rates by exnanding
the money supply too aenressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to chanoes in credit markets,
however, I do not believe there is any way of avoidine some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improverent in inflation and interest rates before too lone.
Sincerely,
er:sep
0403e
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. H. E. Rutti
Dear Mr. Rutti:
Thank you for your postcard stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
F:evij
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0ctober 22, 1991
Mr. Franklin W. Schneider, President
Takora Insulators, Inc.
2345 Montgomery Street
Silver Spring, Maryland 20910
)ear Mr. Schneider:
Thank you for your letter regarding the effects hiph interest
rates have had on the construction industry. I understand what is happening
and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
Particularly harsh impact on credit-sensitive industries while sere other
sectors tf the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandino the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
1 see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
43945
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. 1. Daryl Schneider, President
The Sandar Corporation
1911 Seward Avenue
laples, Florida 33942
Dear Ir. Schneider:
Thank you for your letter regarding the effects high interest
rates have had on your ability to maintain your business and your employees.
I understand what is happening and I ar sympathetic to your concerns.
The current level of interest rates is undoubtedly havinn a
particularly harsh impact on credit-sensitive industries while sore other
relatively unaffected. Current interest
sectors of the economy hue be
rates, however, are a refrection of strone private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
supply
9eserve were to try to lower interest rates by expanding the money
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoidino some of these basic
issues. !‘t any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and ilterest rates before too long.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
October 29, PSI
L. P. Schram, President
Aehrask a Li vestock Feeders ssoci a ti on
1(;20 "!!" Street
Lincoln, ebrask a 6P50R
'ear "!r. Schram:
Thank you for your letter regardino the effects high interest rates
have had on the livestock industry. I understand what is happening and I am
sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have heen relatively unaffected. Current interest
rates, however, are a reflection of strono private credit demands combined
with a large Federal deficit at a tire when the Federal Reserve must
ooderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expandine the money supply
too ageressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are narticularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. "kt any rate, it is my fervent hope that we can all look forward to
an irnproverient in inflation and interest rates before too lono.
c-incerely,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0111••••Mbr
October 22, 1981
Mr. James H. Snoaks
P.O. Box 101
Springfield, Georgia 31329
Dear Mr. Snoaks:
Thank you for your postcard regarding the relationship between the
interest rates and the Consumer Price Index. I am aware of the problems high
interest rates have caused, and I understand the concerns that prompted you to
write.
I recognize that interest rates remain high despite recent reductions
in the inflation rate reflected in the Consumer Price Index. However, the
current interest rates reflect the deeply embedded expectation that prices will
continue to climb, and not simply the current inflation rate measured in the
CPI. In other words, lenders are reluctant to commit their funds without being
compensated for the declining value of the dollars they will receive in payment;
similarly, borrowers are willing to accept these high rates because they expect
to repay the loans in cheaper dollars. In short, inflation and the expectation of
continued inflation are causing high interest rates, and not the other way
around. Since maintenance of control over money and credit is an essential
ingredient in the fight against inflation, the Federal Reserve has little choice
but to continue to pursue a policy of restraint.
For their part in the fight against inflation, the Administration and
Congress have proposed many and realized some essential cuts in Federal
spending. As their fiscal policies, complemented by the monetary policies of
the Federal Reserve, work to strengthen the economy, it is our fervent hope
that we will all see lower interest rates in the future.
Thank you again for taking the time to write.
Sincerely,
BF:evjj
#2302
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Ms. Donna Springer
Dear ms. Springer:
Thank you for your letter regarding the effects high interest
rates havehhad on the small business community. I understand what is
happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strone private credit demands combined
with a large Federal deficit at a time when the Federal leserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I ar convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
4,:set
#3141..
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2ctober 22, 1981
Ir. John teensland, lr.
President
Associates, Inc.
Steensland
110 Pettus Street
Dothan, Alabama 36301
Dear t. Steens land:
Thank you for your letter regarding the effects of high interest
rates on the small business community. I understand what is happeninr and
I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strone private credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
c_Ancerely,
CF:sep
f4164
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Cttober 22, 1981
'Ir. John Tanian, President
',leer England Truck Leasing Corn.
Speen Street
Natick. !Iassachusetts 01760
)ear !`lr. Tanian:
Thank you for your letter regarding the effects of high interest
rates on your truck leasing business. I understand what is happening
and 1 air sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a large Federal deficit at e time when the Federal reserve must
moderate the orowth of money in order to reduce inflation. If the Federal
'7eserve were to try to lower interest rates by expanding the money sunply
too aggressively, I an convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
see in the short run is further action to reduce the Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improverent in inflation end interest rates before too lono.
Sincerely,
0351.1
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Ms. Frances S. Tyler
Dear vis. Tyler:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however,! do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an Improvement in inflation
and interest rates before too long.
Sincerely,
BF:ev jj
#2873
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 19S1
Mr, Robert A. lieboldt
Executive Vice President
lew York State FAilders Association, Inc.
112 State Street - Suite 1318
Albany, lew York 12207
Dear Mr, Wieboldt:
Thanks for sendine me your letter regarding the effects high
interest rates are having on the housine industry and potential home
buyers of the State of New York. I understand what is happenine and I
am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit-sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are a reflection of strong private credit
demands combined with a large Federal deficit at a tine when the Federal
'eserve must moderate the growth of money in order to reduce inflation.
If the Federal eserve were to try to lower interest rates by expanding
the money supply too aeoressively, I am convinced the resultant increase
in inflationary exeectations would lead to even hieher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too lone.
Sincerely,
6F:sep
?..14135
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lctober 22. 10,A.
”rs. 'laroaret F. Illiams
Dear Mrs. 1.11liars:
Thanks for sending me your letter regarding the effect high
interest rates have had on your husband's building business. I understand
;hat is happening and I am sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on housing and other credit—sensitive industries
while some other sectors of the economy have been relatively unaffected.
Current interest rates, however, are P. reflection of strong private credit
demands combined with a large Federal deficit at a time when the Federal
reserve must moderate the growth of money in order to reduce inflation.
If the Federal reserve were to try to lower interest rates by expandine
the money supply too agoressively, I am convinced the resultant increase
in inflationary expectations would lead to even higher interest rates. The
only solution I see in the short run is further action to reduce the
Federal deficit.
I know this may sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avnidinn some of these basic
t any rate, it is my fervent hope that we can all look forward to
issues.
an improvement in inflation and interest rates before too long.
Sincerely,
Vsset
,
14174
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 22, 1981
Mr. Harold
Chairman
Knox County Board
County Court House
Galesburg, lllinois 61401
Dear Mr. Wilson:
Thank you for your letter and resolution stating what you perceive
to be the relationship between high interest rates and inflation. While I
understand the concerns that prompted your message, I want to clear up a fairly
common misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BFsev jj
#3507
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
4
October 22, 1981
Mr. Jerry Wintz
Wintz Construction, Inc
1123 Maus Lane
Wichita, Kansas 67212
Dear Mr. Wintz:
Thank you for your letter regarding the effects high interest
rates have had on your building business. I understand what is happening
and I am syrnathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries while sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strone nrivate credit demands combined
with a large Federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
Reserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
expectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this nay sound a bit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of avoiding sore of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improverent in inflation and interest rates before too lone.
Sincerely,
of:seo
0402fi
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
;.1ctober 22, 19P1
Mr, Robert L. 'Jo-1ff
Chairman of the Board
Rowoco, Inc.
Building 4 - Warehouse Lane
Elmsford, Aew York 10523
Dear
Mr.
Wolff:
Thank you for your letter regarding the effects high interest
rates are havino on your business and the housing industry. I understand
what is happening and I an sympathetic to your concerns.
The current level of interest rates is undoubtedly having a
particularly harsh impact on credit-sensitive industries 1.ihile sore other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strono private credit demands combined
with a lame Federal deficit at a time when the Federal Reserve must
roderete the erowth of money in order to reduce inflation. If the Federal
ileserve were to try to lower interest rates by expandino the money supply
too aoeressively. I am convinced the resultant increase in inflationary
expectations would lead to even hioher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a hit PNstract for businesses and
individuals who are particularly vulnerable to chances in credit markets,
however, I do not believe there is any way of avoidino some of these basic
issues. At any rate, it is my fervent hope that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
r:se.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1
October 22, 1981
Mr. Marvin York
Acting President of the Senate
State Capitol Building
Oklahoma City, Oklahoma 73105
Dear Mr. York:
Thank you for your letter stating what you perceive to be the
relationship between high interest rates and inflation. While I understand the
concerns that prompted your message, I want to clear up a fairly common
misconception.
It is high inflation and inflationary expectations that inevitably
cause high interest rates and not the reverse. Current interest rates are a
reflection of high inflationary expectations as well as strong private credit
demands combined with the need to finance a large Federal deficit at a time
when the Federal Reserve must moderate the growth of money and credit in
order to reduce inflation. If the Federal Reserve were to try to lower interest
rates by expanding the money supply too aggressively, I am convinced the
resultant increase in inflationary expectations would lead to even higher
interest rates. The only solution I see in the short run is further action to
reduce the Federal deficit.
I know this may sound a bit abstract for businesses and Individuals
who are particularly vulnerable to changes in credit markets, however, I do not
believe there is any way of avoiding some of these basic issues. At any rate, it
is my fervent hope that we can all look forward to an improvement in inflation
and interest rates before too long.
Sincerely,
BF:ev jj
#2879
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 2p, 10P1
Mr. W. 6. Young
Young Company
(»c 127
Marshall, Missouri f53110
Dear Mr. Young:
Thank you for your letter regarding the effects high interest
rates have had on your business. I understand what is happening and I
am sympathetic to your concerns.
The current level of interest rates is undoubtedly havino a
,articularly harsh impact on credit-sensitive industries while some other
sectors of the economy have been relatively unaffected. Current interest
rates, however, are a reflection of strong private credit demands combined
with a laroe federal deficit at a time when the Federal Reserve must
moderate the growth of money in order to reduce inflation. If the Federal
r'eserve were to try to lower interest rates by expanding the money supply
too aggressively, I am convinced the resultant increase in inflationary
exnectations would lead to even higher interest rates. The only solution
I see in the short run is further action to reduce the Federal deficit.
I know this may sound a hit abstract for businesses and
individuals who are particularly vulnerable to changes in credit markets,
however, I do not believe there is any way of evoiding some of these basic
issues. At any rate, it is my fervent hone that we can all look forward to
an improvement in inflation and interest rates before too long.
Sincerely,
F:se,
";;1 7
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
@FedFRASER