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IN F L A T IO N - 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
