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W H A T DOES I N F L A T I O N C O S T ? An a d d r e s s b e f o r e the In de pe nde nt B a n k e r s ' A s s o c i a t i o n o f A m e r i c a 39th Annual C o n v e n t i o n M a r c h 18, 1969 by M onroe Kimbrel, President F e d e r a l R e s e r v e Bank o f Atlanta At this t i m e o f y e a r , m a n y o f us like to l o o k b a c k and m e a s u r e our a c c o m p lis h m e n ts . I co ul d , t h e r e f o r e , take the e a s y w a y and spen d m y allot ted t i m e r e m i n d i n g you of the go od things we ha v e gained. You r e c o g n i z e , I a m s u r e , that we as a nation a c h i e v e d m u c h in 1968, and the futu re l o o k s v e r y b r i g h t . Y ou a l s o no doubt r e c o g n i z e that the n a t i o n ' s banks s h a r e d in this g r o w t h , with d e p o s i t s and e a r n i n g s up s h ar p l y. I w i l l not, h o w e v e r , e n l a r g e on t h e s e poin ts o f -which you a r e a w a r e , but should like to d i s c u s s the l o s s e s we s u f f e r e d b e c a u s e o f the f a i l u r e to s t e m the a c c e l e r a t i o n of i nf la ti o n during 1968 . L e t us c o n s i d e r t h r e e d e v e l o p m e n t s that, although they - 2 - c o v e r o n l y a p a r t of the l o s s i n c u r r e d by inflation, do m e r i t o u r serious reflection. 1. A t the end o f 1968, the d o l l a r - - as m e a s u r e d by c o n s u m e r p r i c e s - - was w o r t h a l m o s t 5 p e r c e n t l e s s than it was a y e a r e a r l i e r . 2. The United States, p a r t l y b e c a u s e o f the i n f l a t i o n a r y t r en d , l o s t the m a j o r p a r t o f its f a v o r a b l e p o s i t i o n in w o r l d t r ad e. 3. In s o m e i n s t a n c e s , planning f o r in f l at i o n was substituted f o r planning f o r p r o d u c t i o n b y a ch ang e o f e m p h a s i s in m a k i n g j u d g m e n t s on sp e n di n g and i n v e s t i n g . (In m y o p i n i o n this is the g r e a t e s t l o s s . ) No doubt, s o m e b u s i n e s s m e n a r e h ap p y about t h e i r a b i l i t y to c h a r g e h i g h e r p r i c e s ; t h e i r f i n a n c i a l s t a t e m e n t s l o o k b e t t e r as a result. Also, c o r p o r a t i o n s m a y point to i n c r e a s e d e a r n i n g s p e r share of stock. B u s i n e s s m e n m a y be e s p e c i a l l y ha p p y i f the i n c r e a s e in the p r i c e s o f g o o d s the y s e l l i s m o r e than the i n c r e a s e in the p r i c e s of g o o d s and s e r v i c e s they buy. This h a p p i n e s s , h o w e v e r , w i l l s o u r if the p r i c e s o f the m e r c h a n d i s e o r s e r v i c e s the y o f f e r do not continue to r i s e o v e r the p r i c e s o f t h e i r p u r c h a s e s . -3- Not e v e r y o n e has b e e n so fortunate; and as c o s t s c a t c h up, it is l i k e l y that the n u m b e r r e t a i n i n g this p a r t i c u l a r type o f le ad wil l be g r e a t l y d„ u ni s he d . In the long run, the b e n e f i t s of i nf lat io n will in e v i t a b l y a c c r u e to only a f e w p e r s o n s . One d o e s not have to go f a r to find m a n y p e r s o n s who in 1968 l o s t th r o u g h inf lat io n. C o n s u m e r s , as a g r o u p , found that, in the. end, the m a j o r p a r t of 1 9 6 8 ' s g r o w t h in i n c o m e was an i l l u s i o n . the p e r c ap it a d i s p o s a b l e i n c o m e , F ederal taxes, In 1967, or average in c o m e per p e r s o n after was $2, 744; during the y e a r , the a v e r a g e i n c o m e i n c r e a s e d b y $182 to r e a c h a total of $ 2 , 9 2 6 p e r c ap it a. M e a s u r e d in c u r r e n t d o l l a r s (that i s , without a l l o w a n c e f o r d e t e r i o r a t i o n in purchasing power), the i n c r e a s e was about 7 p e r c e n t . The c o n s u m e r s m a y not h a v e b e e n a c qu a in t e d with the s t a t i s t i c s , but they l e a r n e d t hr oug h h a r d e x p e r i e n c e o f the a t t r i t i o n in t he ir p u r c h a s i n g p o w e r as the y e a r p r o g r e s s e d . S t a t i s t i c i a n s tell us that, when this $182 gain is d e fl a te d f o r the i n c r e a s e in p r i c e s , the p e r c ap it a gain in p e r s o n a l d i s p o s a b l e i n c o m e d uri ng 1968 w as o nl y 3 p e r c e n t . T o r e fu te the b e l i e f that the e c o n o m y gains f r o m inf lat io n, I c a l l y o u r attention to an a r t i c l e in the F e b r u a r y 17 i s s u e o f the Wall S t r e e t J o u r n a l r e v i e w i n g v a r i o u s c a s e stu di e s g a t h e r e d f r o m t h r o u g h out the nation. The a r t i c l e c o n c l u d e s , ''Inflation is s h a t t e r i n g m a n y -4- A m e r i c a n s ' c o m p l a c e n t b e l i e f that e v e r y y e a r they a r e li ving a little b e t t e r than b e f o r e . " In the w o r d s of the a r t i c l e , m an y p e r s o n s r e p o r t " l e s s b o w l i n g , m o r e o v e r t i m e ; no c o o k i e s f o r the kids; r e t i r e e s top s eating th re e t i m e s a day; and cutting out p o r k and ve a l and substituting s a l a d s . " The u n e v e n i m p a c t of inflation exte nd s b e y o n d those with relatively low in c o m e s . F o r e x a m p l e , while attending a m e e t i n g r e c e n t l y I talked with a b u s i n e s s m a n who is a l s o the t r u s t e e of a p r e p a ra to ry school. He c o m p l a i n e d that the funds l a b o r i o u s l y a c c u m u la t e d o v e r the y e a r s f o r c o n s t r u c t i o n o f a b a d l y n e e d e d bui lding this y e a r f e l l f a r s h o r t of the p r e s e n t c o s t b e c a u s e of r i s i n g p r i c e s . A c i t y o f f i c i a l attending the s a m e m e e t i n g was a c u t e l y a w a r e o f the r i s i n g c o s t s o f g o v e r n m e n t and c ap it al i m p r o v e m e n t s c a u s e d by inflationary conditions. gets out o f joint, Under i n f l a t i o n a r y c o n d i t i o n s , the e c o n o m y and yo u as b a n k e r s , I a m s ur e , ha ve h e a r d m a n y s uch c o m p l a i n t s . B a n k e r s w e l l k n o w that the p r i c e of m o n e y , li ke the p r i c e s of g o o d s and s e r v i c e s , has i n c r e a s e d b r i s k l y . Y i e l d s on l o n g - t e r m g o v e r n m e n t s e c u r i t i e s a r e the h i g h e s t s i n c e the C i v i l W ar . Higher r a t e s a r e c h a r g e d on l o a n s and i n v e s t m e n t s , and r e f l e c t h i g h e r e a r n i n g s -5- on bank s t a t e m e n t s . But in f l a t ed e x p e n s e s cut net p r o f i t s and the d o l l a r s banks e a r n e d f r o m h i g h e r i n t e r e s t ra t e s bought l e s s . What is m o r e , every f i x e d i n c o m e a s s e t on the b a n k e r s ' bo o k s d e c r e a s e d in m a r k e t value as i n t e r e s t r a t e s r o s e - - a r e c u r r i n g d e v e l o p m e n t in i n f l a t i o n a r y periods. When the g e n e r a l p u b l i c b e c o m e s a w a r e o f the d e c r e a s e d p u r c h a s i n g p o w e r of its m o n e y , m a n y of its m e m b e r s find it m o r e d if f ic u lt to save and be g i n to w o n d e r if it is e ve n w o r t h w h i l e . ta ile d s avi ng b e c o m e s w i d e s p r e a d , If c u r the nation w i l l e x p e r i e n c e a w e a k e n in g in one o f the c h i e f f o r c e s r e s p o n s i b l e f o r its e c o n o m i c g r o w t h and high p r o d u c t i v i t y . people, The fa c t i s , the s a vi n g s o f the A m e r i c a n of c o n s u m e r s as w e l l as b u s i n e s s m e n , p r o v i d e m u c h o f the c a p i t a l i n v e s t m e n t funds r e q u i r e d f o r e c o n o m i c gro w th . The s e c o n d l o s s during 1968 b e c a u s e of i nf lat io n was a d e t e r i o r a t i o n of the c o u n t r y ' s c o m p e t i t i v e p o s i t i o n in w o r l d t r a d e . Our total b a l a n c e o f p a y m e n t s f o r 1968 l o o k s v e r y good on the surface. D u r in g 1968, this nation a c h i e v e d a b a l a n c e of p a y m e n t s s u r p l u s f o r the f i r s t t i m e s i n c e 1957. Balance of payments, i n c l u d e s f i n a n c i a l t r a n s a c t i o n s and o th e r n o n - t r a d e f a c t o r s . of c o u r s e , - 6 - I sh all not go into the de ta il s of h o w this s u r p l u s was a c h i e v e d e x c e p t to s u g g e s t that m a n y of the f o r c e s c r e a t i n g la s t y e a r ' s s ur pl u s m a y not be as s t r o n g this y e a r . The s t o c k m a r k e t b o o m , the r e p a t r i a t i o n o f c o r p o r a t e funds, and the s u c c e s s in c u r t a i l i n g le nd ing a b r o a d by U. S. banks all p l a y e d a p a r t in a c h i e v i n g a s ub sta nt ial i n c r e a s e in f i n a n c i a l f l o w s into this co un tr y. The total c o n c e a l s the s e r i o u s d e t e r i o r a t i o n in the t r a d e s ur pl u s o f the United States. In p r i o r y e a r s , we hav e b e e n able to count on s e l l i n g s u b s ta n t i a l l y m o r e g o o d s and s e r v i c e s a b r o a d than we i m p o r t e d . T h i s f a v o r a b l e b a l a n c e o f tr ad e h e l p e d c a r r y the lo a d of g o v e r n m e n t e x p e n d i t u r e s a b r o a d and d r a i n s thro ugh f i n a n c i a l t r a n s a c t i o n s . The United States was c o m p e t i t i v e in w o r l d m a r k e t s during the e a r l y 1 9 6 0 's l a r g e l y b e c a u s e it was able to k e e p the p r i c e s o f its e x p o r t s r e l a t i v e l y st a b l e, w h e r e a s m a n y f o r e i g n c o u n t r i e s s u f f e r e d i n t e r n a l i n flation. We ha v e l o s t this advantage. In 1968, the e x c e s s of the value o f this c o u n t r y ' s g o o d s and s e r v i c e s e x p o r t e d o v e r t h o s e i m p o r t e d was m o r e than $3 b i l l i o n l e s s than in e i t h e r 1966 o r 1967. Rising p r ice s here have m ade our exports l e s s a t t r a c t i v e to f o r e i g n e r s and ha v e a t t r a c t e d m o r e i m p o r t s . Most e x p e r t s se e litt le hope f o r i m p r o v i n g this situ atio n v e r y m u c h until we bring our rising p r ic e s under control. - 7 - The shifting o f e m p h a s i s t o w a rd i n f l a t i o n a r y c o n s i d e r a t i o n s whe n m a k i n g d e c i s i o n s to spend o r i n v e s t m a y turn out to be the g r e a t e s t l o s s dur ing 1968 b e c a u s e o f inflation. Traditionally, the A m e r i c a n b u s i n e s s m a n a n a l y z e d e c o n o m i c o p p o r t u n i t i e s on the b a s i s o f h o w they wou ld p r o v i d e the s e r v i c e s o r p r o d u c e the g o o d s to m e e t the d e m a n d s of the p u b l i c . failure, S u c c e s s or r e f l e c t e d b y his p r o f i t s , has t y p i c a l l y d e p e n d e d upon the b u s i n e s s m a n ' s a s t u t e n e s s in d i s c o v e r i n g t h e s e o p p o r t u n i t i e s and his e f f i c i e n c y in p r o d u c i n g the g o o d s o r p r o v i d i n g the s e r v i c e s the p u b l i c w an ts . In c o n t r a s t , in m a n y c o u n t r i e s o f the w o r l d d e c i s i o n s to i n v e s t o r to launch e n t e r p r i s e s ha ve b e e n b a s e d a l m o s t e n t i r e l y upon i n flationary considerations. I n v e s t m e n t s t h e r e a r e not c h o s e n b e c a u s e they a r e m o s t p r o d u c t i v e in m e e t i n g the d e m a n d s of the p u b l i c , but b e c a u s e it a p p e a r s they w il l b e n e f i t m o s t o r s u f f e r l e a s t f r o m inflation. Under this p h i l o s o p h y , m a y r e f l e c t o nl y inflation. m i s t a k e s ; in the long run, in s t e ad of m e a s u r i n g e f f i c i e n c y , p r o f i t s In the s h o r t run, rising p r ice s m ay conceal r e s o u r c e s are m isd ir e c te d . G iv i n g r e w a r d s to the i n f l a t i o n - m i n d e d d e s t r o y s the v e r y b a s i s f o r the o p e r a t i o n s o f a free enterprise system. - 8 - One o f the things s u g g e s t e d in a r e c e n t r e v i e w o f e c o n o m i c h i s t o r y w a s that e c o n o m i s t s in 1834 b e l i e v e d the c o n s u m e r , investor, the • is m o t i v a t e d by f e a r when things a r e going down o r a r e at the b o t t o m . But when p r i c e s r i s e , a re m otivated by greed. as they a r e now, som e people And this g r e e d d e s t r o y s r at i on al j u d g m e n t. C o u l d it be said today that a p ar t o f the A m e r i c a n p u b l i c is b e i n g m o t i v a t e d by g r e e d , as shown f o r e x a m p l e by t h o s e in the s t o c k m a r k e t who d i s r e g a r d the c u r r e n t p r i c e - e a r n i n g s r at io and the i n t r i n s i c value o f s o m e of th eir i n v e s t m e n t s ? M oreover, un f or tu nat el y, t h e r e a r e t h o s e in the banking b u s i n e s s who m a y h a v e p u r s u e d the s a m e m i s d i r e c t e d g o a l s . S o m e of us in the F e d e r a l R e s e r v e would like to h e a r that b a n k e r s ha ve begu n to s a y " N o " to c e r t a i n o f th e i r loan a p p l i c a n t s . We should like to see m o r e c o n s u m e r s with l e s s o f this p s y c h o l o g i c a l f e a r o f inf latio n, so that they w i l l b a s e f e w e r f i n an c ia l d e c i s i o n s on what p r i c e s m a y be tom orrow , next mo nt h, o r in two m o n t h s . It i s g e n e r a l l y p o p u l a r to b l a m e r i s i n g p r i c e s on s o m e o n e e l s e . F o u r g o o d t a r g e t s ar e : 1. L a b o r , w h i c h is a c c u s e d o f p us hin g up w a g e s f a s t e r than productivity; 2. Bu s i n e s s , w h i c h is often c h a r g e d with b e i n g o v e r - e a g e r to r a i s e p r i c e s in o r d e r to m ain tai n p r o f i t s ; - 3. 9 G o v e r n m e n t s pe ndi ng , - which we all think should be r e d uc ed e x c e p t f o r the things we a r e i n t e r e s t e d in; and 4. The F e d e r a l R e s e r v e , which s o m e c l a i m has not be en tight enoug h with its m o n e t a r y p o l i c i e s . A s t r o n g c a s e has b e e n m a d e to s u p p o r t e a c h one of th e s e charges. L a b o r c o s t s ha v e r i s e n . productivity. E m p l o y e r s c o m p l a i n of l o w A v e ra g e hourly earnings of manufacturing w ork ers r o s e o v e r 6 p e r c e n t b e t w e e n the end of 1967 and the end o f 1968. S o m e w o r k e r s e x p e r i e n c e d g r e a t e r gains, and s o m e l e s s . T h e r e is no q u e s t io n , h o w e v e r , but that inflation i t s e l f was a m a j o r spu r to the push t o w a r d hi gh w a g e s , and the a v e r a g e w o r k e r can s c a r c e l y be b l a m e d f o r t r y i n g to m a i n t a i n his i n c o m e in the f a c e of r i s i n g prices. On the o t h e r hand, the w o r k e r s can point to h i g h e r c o r p o r a t e p r o f i t s in 1968 than in 1967. E v e n after su b s ta n t i a l l y h i g h e r t a x e s , c o r p o r a t e p r o f i t s r o s e f r o m $48. 1 b i l l i o n in 1967 to $51 b i l l i o n in 1968. But w ou ld not s o m e b u s i n e s s m e n r e s p o n d that this was on ly the n o r m a l g r o w t h r e q u i r e d to m ai n t ai n i n c e n t i v e s ? It i s , o f c o u r s e , tru e that g o v e r n m e n t spending has b e e n high. The F e d e r a l d e f i c i t f o r f i s c a l 1968 r e a c h e d $25. 2 b i l l i o n and in the la s t h al f o f c a l e n d a r 1968 was $11 bil li on . To fi n a n c e this, the -10- U. S. T r e a s u r y had to b o r r o w $23. 1 b i l l i o n f r o m the p u b l i c in f i s c a l 1968 and $11. 3 b i l l i o n in the la s t half of 1968. This b o r r o w i n g on top of h e a v y d e m a n d s f o r funds by the p r i v a t e s e c t o r had m u c h i n f l u e n c e on the high i n t e r e s t r a t e s . Si nc e a l a r g e p ar t o f the d e f i c i t was f i n a n c e d b y ad d it io na l bank c r e d i t , In e a r l y 1967, inflationary p r e s s u r e s w ere in cre a se d . e c o n o m i c and f i n a n c i a l e x p e r t s p oi nt ed out that the nation was going to get into t r o u b l e if it did not i n c r e a s e tax e s o r reduce expenditures. T^gj-g was no la ck o f w ar ni ng , but C o n g r e s s was s l o w to en a c t l e g i s l a t i o n to c o p e with the p r o b l e m . p r e s s u r e s hav ing be en built up fo r so long, F i n a l l y , with the s u r t a x p r o g r a m that was put into e f f e c t in m i d - 1968 has b e e n slow' to take e f f e c t . U lt i m a t e l y , it m a y help. B e f o r e c o n d e m n i n g s e n a t o r s and r e p r e s e n t a t i v e s in C o n g r e s s f o r dilatory actions, c o n s i d e r if it m igh t not be true that they w e r e r e f l e c t i n g p r e t t y w e ll the s e n t i m e n ts of their co n s ti t u e n ts . Is it not p o s s i b l e that the t a x p a y e r ho p e d t a x e s c ou l d be r e d u c e d if the F e d e r a l G o v e r n m e n t w o u ld cut e x p e n d i t u r e s f o r e v e r y t h i n g but t h o s e p r o j e c t s w h i c h had his special approval. H ow m a n y o f us w r o t e l e t t e r s to our C o n g r e s s m a n applauding the c l o s i n g down o f a l o c a l F e d e r a l f a c i l i t y o r e s t a b l i s h m e n t ? On the o t h e r hand, h o w m a n y o f us applauded ou r C o n g r e s s m a n d ur ing 1967 - 11 - and e a r l y 1968 if he ann o un ce d he would have nothing to do with a tax increase ? A n o t h e r p o p u l a r whipping b o y is the F e d e r a l R e s e r v e S y s t e m . C r i t i c s can point out that in the f i r s t hal f o f 1968 bank c r e d i t r o s e at what they c o n s i d e r e d an e x c e s s i v e l y high s e a s o n a l l y ad ju s t e d annual ra te o f 6. 5 p e r c e n t . A f t e r m i d - y e a r , the annual rate o f gr o w t h was e v e n h i g h e r - - about 21 p e r c e n t in July and A u g u s t and 15 p e r c e n t in September. B y the end o f the y e a r , the rate had s l o w e d down a bit. With p r i c e s r i s i n g so ra p i d l y , c r i t i c s ask, ' : Why did the F e d e r a l R e s e r v e supply the r e s e r v e s to the banking s y s t e m that m a d e this g r o w t h in bank c r e d i t p o s s i b l e ? ,! You v/ill find that I am on r e c o r d as havin g s u g g e s t e d during 1968 that the bank c r e d i t gro wt h w as e x c e s s i v e . At the s am e t i m e , it i s on ly f a i r to point out that the F e d e r a l R e s e r v e was caught in a t r a p that p r e v e n t e d it f r o m e x e r t i n g the p r e s s u r e s r e q u i r e d to c o m p l e t e l y o f f s e t the e f f e c t s o f d e f i c i t T r e a s u r y f i n a n c i n g . Alone, the F e d e r a l R e s e r v e c ou l d not have he ld b a c k the i n f l a t i o n a r y p r e s s u r e s c o m p l e t e l y without c r e a t i n g s e r i o u s side e f f e c t s . You w i l l r e c a l l that, b e c a u s e of the f a i l u r e to take t i m e l y a c t i o n in r e s p e c t to f i s c a l p o l i c y , the T r e a s u r y was f o r c e d to b o r r o w h e a v i l y -12- during 1968, e s p e c i a l l y d ur in g the s e c o n d half. C o r p o r a t i o n s and state and l o c a l g o v e r n m e n t s w e r e s t r o n g l y c o m p e t i n g f o r funds. I n t e r e s t r a t e s w e r e high. H o w m u c h h i g h e r they would have gone had not the F e d e r a l R e s e r v e suppl ie d s o m e ad di ti ona l c r e d i t to the banking s y s t e m no one k n o w s . in r a t e s , h o w e v e r , An even g r e a t e r and sudden i n c r e a s e m i g h t have b e e n d i s a s t r o u s , p o s s i b l y in c l u d i n g a f a i l u r e in T r e a s u r y f i na nc in g . P e r h a p s the F e d e r a l R e s e r v e ca n be c r i t i c i z e d f o r its p o l i c y ju d g m e n t s , but t h o s e who do so should r e m e m b e r the p r o b l e m that was f a c e d , problem , who and what c r e a t e d the and what m i g h t have b e e n the c o n s e q u e n c e s o f a m o r e restrictive policy posture. In a d e m o c r a c y such as o u r s , r e s p o n s i b i l i t y f o r k e ep i n g our e c o n o m i c and f i n a n c i a l a f f a i r s in o r d e r cannot be shifted to the s h o u l d e r s o f any one gr oup . N e i t h e r can a d e m o c r a c y e x p e c t any a g e n c y it m a y set up, i nc lu d in g a c e n t r a l bank such as the F e d e r a l R e s e r v e S y s t e m , to s u c c e s s f u l l y do the j o b u n l e s s t h e r e is w i d e s p r e a d p u b li c s up por t. P r o f e s s o r Reu f, the F r e n c h f i n a n c i a l e x p e r t , has stated that no d e m o c r a t i c s o c i e t y c an be e x p e c t e d to run its f i n a n c i a l a f f a i r s successfully. " I s he r ig ht ? " y o u m a y w e l l ask. - 13 - A m e r i c a n e c o n o m i c and financial h i s t o r y has shown that a s o c i e t y s uch as o u r s can m a n a g e its fi n a n c i a l a f f a i r s when it wants to. We ha v e m a d e m i s t a k e s , s o m e t i m e s we have r e f u s e d to f a c e r e a l i t y , we have r e f u s e d to a c c e p t d i s c i p l i n e , and s o m e s p e c i a l i n t e r e s t s have at t i m e s f o r g o t t e n the pu blic i n t e r e s t . But the r e c o r d of o u r A m e r i c a n s o c i e t y is f a r b e t t e r than that o f m o s t of the nations o f the w o r l d . When we have l a p s e d , we have e ve n tu al ly r e a l i z e d the d i s a s t r o u s c o n s e q u e n c e s that could r e s u l t u n l e s s we ch an g ed d i r e c t i o n . We have then a c c e p t e d the c o l l e c t i v e r e s p o n s i b i l i t y and st o p p e d tr yi ng to shift r e s p o n s i b i l i t y to o t h e r s . Political leaders, businessm en, and l a b o r have r e s p o n d e d b y taking or su ppo rt ing the n e e d e d ste ps to r e s to r e financial o rd er. Who is r e s p o n s i b l e f o r our p r e s e n t i n f l a t i o n a r y p r o b l e m ? labor, or business, s h o u l d e r the b l a m e ? or government, Is o r the F e d e r a l R e s e r v e to P e r h a p s all o f th e m m u s t a c c e p t s o m e of the c e n s u r e , but I a m i n c l i n e d to think we can p l a c e m o s t of the b l a m e on ou r own c o l l e c t i v e c o m p l a c e n c y - - the f a i l u r e of you and m e and o t h e r A m e r i c a n s to a c c e p t the r e s p o n s i b i l i t y and to act. I a m conf ide nt, t h e r e f o r e , control. that we can b r i n g i nf lat io n un de r M o r e and m o r e p e r s o n s r e a l i z e that, i f the s a m e i n f l a t i o n a r y - 14- c o n d i t i o n s p r e v a i l in 19&9 as i-n 1968, o u r l o s s e s ca n be c o m p o u n d e d . The r e a l i z a t i o n that th e s e c o n d i t i o n s m u s t be c o n t r o l l e d is p e r h a p s getting o u r f i s c a l a f f a i r s in a rriore m a n a g e a b l e state. c o n t r o l of our f i s c a l a f f a i r s , to m a n e u v e r . With b e t t e r m o n e t a r y p o l i c y m a y have m o r e r o o m Signs h e r e and th ere att est that the f r a n t i c p a c e of the e c o n o m y is abating. P a t i e n c e and d e t e r m i n a t i o n can win the battle ag a i n s t inflation. B o w i n g to the t e m p t a t i o n o f i n f l a t i o n a r y g r e e d and d i s r e g a r d i n g the n e e d f o r d i s c i p l i n e ca n m a k e the battle m u c h h a r d e r to win. all s u p p o r t th o s e w h o s e j o b it is to a d m i n i s t e r the d i s c i p l i n e , can b e o u r s . If we victory
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