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Opening Remarks for Jerry Jordan's
Address to the Cleveland Foreign Consular Corps

/ /


Event is one of regular monthly
luncheons of the Foreign Consular
Corps, which is comprised of
Consuls or Consuls General of 19
countries with representatives in
Greater Cleveland.


Lunch at noon, speaker begins at
1 p.m. and speaks for about 20
minutes, followed by Q&A.


Ritz-Carlton Hotel, Director's
Room, 7th floor


Ivan L. Miller, Honorary Consul of

Thank you, Ivan.

It's a pleasure to be here today to

address this distinguished group.
The subject of my remarks today is inflation in the American

That might seem a bit unusual, as inflation hasn't been

much in the news lately.

When it does get mentioned, it's only

to say that it hasn't been much of a problem lately, and it's not
expected to become one in the near future.
And yet, there is considerable evidence that American
corporations, as well as the general public, are still wary of

Consumers are refinancing home mortgages at fixed

interested rates that will be high real rates unless the
inflation rate rises.
Similarly, corporations are borrowing long-term money at
real rates that will be high unless the rate of inflation rises.
At one time in the not-too-distant past, the expectations of

Americans regarding inflation were of little interest to the rest
of the world.

But not any more.

The economies of the world's

nations, particularly the industrialized nations, are so
intertwined that developments in one can profoundly affect
everyone else.
Consider what happened just last fall when the German
Bundesbank, striving to keep inflation in check in the wake of
unification, declined to lower interest rates.

The effects were

felt immediately, causing several other European nations to
withdraw from the Exchange Rate Mechanism.
More ominously, many analysts fear that if hyperinflation
continues in Russia and the other former nations of the U.S.S.R.
for an extended period, it will lead to the return of an
authoritarian form of government, with potentially grave
consequences for Russian-American relations.
Clearly, no economic trend or development can occur in
isolation anymore.

What Americans think will happen in regard to

inflation has the possibility for profound repercussions

So what I'd like to discuss today is Americans'

expectations about inflation, and how those expectations hamper
economic performance.

(pick up Page 2, Roman Numeral II,

"Skepticism about the Direction of Inflation: Causes, Costs, and