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IN F L A T IO N

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F IN A N C IA L

AM D

D IR E C T

CO N TR O LS

fy
c
Karl R. Bopp, Vice President
Federal Reserve Bank of Philadelphia
before the Banking and Business Conference
Susquehanna University, Selinsgrove, Pa.
October 15, 1952

Flow of money and the flow of goods and services
The spending units: Government - Business - Individuals
Size - Public versus private sector
2nd Quar. 1952
Government
( ) National defense
a
(b) Other, incl. local
Investment
Consumption

50
28
49
214

Spending relative to receipts - tax structure
Over-all balance and relative prices
fa) Profits and losses - success and failure
(b) Effects of price on supply, on demand
(c) Allocation of resources
Excess of over-all demand
(a) Inflation - uncontrolled
(1 Redistribution of vealth
)
( ) Apparent prosperity
2
(b) Direct controls
( ) Deferred meeting of problem
1
- accumulating purchasing power
( ) Price ceiling
2
- controlled essentials diverts
sources of uncontrolled items
(3) Rationing - sugar
( . Effects on use of real resources
4)
(5) Effects on our way of life
Financial controls
(a) Fiscal policy
(b) Monetary policy




Over-all tax structure
Fixed rate