View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

OCTOtfft 10, It7f

Any «nd all ••t«rl«l fro* this transcript a»st be «r«dlt«d to
-Th« MacH«ll/l»hr«c t«»ort", MIT/TB1ITEM. »•» fork « 4 WTA/26
Matto«al tw—9


««*« »i«hoU 4
P»bliC talacioo*

JIM LCHRER: His name is rani Volcker. Hn's Chairman of a
Federal teserve Board which mede some decisions over the week end
that today, among other thing*f figured la oae of the moot chaotic
days ev«r on Wall Street.
Tonight, we aok Mr. Volekcr whatvo go log on and why*

Good evenings

It wee a day Wall Street will long remember* Blghty~two
million aharea of stock changed handa on the flew York Stock
Exchange. 16.000,000 more than on any other ono day in i t a 1*S~
year history. The American txchenge eleo aet a record for oh area
traded. There wee chaos on the floors of both a l l dayx the Hew
York's new electronic trading system running more than an hour
behind, one market analyst deecrlblag the atmosphere ae one of
"restrained terror•*
On the price side, the Dow Jonee lad as t r i a l average waa down
25 points at one time. Late in the day i t recovered eome loot
ground and finally closed more than 8 points down. But of the
more than 1.600 different stocks traded, ell bwt one hundred or
so lost value. Most attributed today's tumult to Saturday**
decision by the Federal fteoorve to tighten money an a way to curb
The stock market9* wee the most drsmstlc, but i t wssn9t the
only reaction. Commercial banks yesterday raised their prime

rate — what they charge t h e i r preferred customers — to a record
14.St. Thla waa followed today by predictions that email business
w i l l almoat immediately be enable to borrow money, and by January,
people In at least 24 atatea won't bo able to aoemro homo mortgages.
Overseas, the price of gold went op today and tho price of
tho dollar went down. Just the oppooito of what they were auppeeed
to do.
All in a l l . a h e c t i c and confusing day, *•« fourth in a row
alnco the Federal teserve made i t ' s movo. I t ' s tho foar days
later view of a man who started i t a l l , Fodaral t e s e r v e Chairman
Pawl Volcker, that we got tonight.

lobert MacMeCl la o f f ; Charlayno ttuster-Gault i s i n Mew


CXAftLAYNC atJHTM-CAULT: Even before Paul folckor got tho
number ono Job at tha Fed, he was considered tho second moat
v i s i b l e o f f i c i a l i n tho Federal Reserve system. Since 1975. he'd
bean Chairman of the I w York Fad, the operational arm of tho
system. Prior to t h a t , ha'd boon a Vail Street banker, and has
served l a top Federal Treasury posts in both Republican and
Democratic adminlatrations. Mr. Volcker's broad financial experience,
particularly In the area of foreign exchange, made him well-known
in international financial c i r c l e s . At tho time of h i s appointment
as the Chairman of tho Fad, moat exports predicted ho would not
make any radical changes In Fed p o l i c y .
LBBtBti tot X would guess, Mr. Volcker. that many of those
exports are saying today that maybe they woro wrong. Vould you
PAUL VOLCKBR: Well. I don't know whether these are radical
changes in Federal Reserve policy in a very fundamental sense.
He want to deal with this problem of inflation, and X think that
intention waa perhaps reinforced in the public mind by the actlone
we took on Saturday. But in a very basic aenoo, tho policy haa
been there, and wo intend to carry it out.
LKtttBR: Old you expect the atock market to react the wey It
haa after your decision?

VOLCKSt: Oh. I a e r t a l n l y thought there would be m r e a c t i o n
i n the stock market. Whether you « k a« whether I p r e d i c t a
p a r t i c u l a r volume kind of day that we had, or * p a r t i c u l a r p r i c e
performances, I don't think i s t h e p o i n t . X think ch« point may
t o that we captured t h o i r a t t e n t i o n ; «« captured p e o p l e 1 * a t t e n t i o n ,
and I think t h a t ' s c o n e t r a c t i v e i n a s e n s e , seeauea t h e r e ' s t e e n
a l o t of doabta, a l o t of s n x i e t y that t h i s I n f l a t i o n wan going
to gat o«t of c o n t r o l , and I t ' a not going t o got o a t of c o n t r o l
i f wo do our J o b , and we'r* attempting t o do oar J o b , and we'ra
going t o tara the corner on t h i s i n f l a t i o n a r y p r o c e s s .
LBHftSBz Yoa don't a e e , than, t h e stock aarket r e a c t i o n as
something t o got worried about at t h i s s t a g e .
VOLCUti l a . X think paopla era r e a p p r a i s i n g whet's been
going on, and i f people boaght s t o c k s with tha a x p a c t a t l o a of
more i n f l a t i o n , l a a senae they nay bo d i s a p p o i n t e d . But i f
people are baying s t o c k s i n t e r a s of tha long-term f u t u r e af t h e
economy, X think withoat q u e s t i o n , they ought t o have more soafldaaci
i n t h e f u t u r e . X think u l t i m a t e l y t h i s i s good f o r tha s t o c k
• a r k e t . There's no question i n ay ajind about t h a t .
•LIRRBk: i t has boon four days now. Various r e a c t i o n s taken
i n a gonoral way o r taken t o g e t h e r — da yoa neve any saaaad
thoughts about what yea decidodt*.
VOLCKBB: ... <Mo. not n e c e s s a r i l y . One can novor a n t i c i p a t e
proclae r e a c t i o n s , but we've been d e a l i n g with t h e c a l a l a a t i o n of
a l o t of oconoalc d i f f i c u l t i e s over a decsdo or more. X think
we've reached a point whero the anxiety about i n f l a t i o n had
gotton very g r o a t ; I think i t ' s racognlsad as oar uunber one
problem; a l o t of poople were a k e p t l c a l about whether wa could
deal with i t . X hopa t h e y ' r e l e s s s k e p t i c a l now than they were
b e f o r e , but when they were l i v i n g i n a n t i c i p a t i o n of i n f l a t i o n ,
and that beglna t o bo questioned, which i s fundamentally h e a l t h y ,
X suppose you expect some reappraiaai i n t h e s e c u r i t i e s market
when that happens.

Was I t a tough d e d a l o a t o a eke f o r you p e r s o n a l l y ?

VOLCKBflt: Well, nono of t h e s e d e c i s i o n s arv aaay, bat X
think i t ' s — basically i t ' s pretty clear that the situation
required some action, and I think that what I've ruad in reaction
to the decision, people I've talked to — X think that's a rather
unanimous viow that some action of thlo sort was what tha sitoettoa
called for.


Thank you.

HUNTfiR-CAULT; Mr. Volcker, in the simplest of t i m , what
was your plea trying to accomplish?
-. VOLCJCIK: ffell, you know, i t f e somettoes hard to bo s i a p l e
in * f i e l d mm abstract aa money, but what we're trying to accomplish
l a a9 vary basic eense la to dsal with t h i s Inflationary problem
that s gripped us for so** tine* In tko more immediate sense,
what wo went to do i s make sera that ths mossy aspply l a under
control, because that ultimately i s r s l a t s d to ths l s f l a t i o a a r y
procsss. And slong with that, asssto t h s r s I s n ' t an s*c«ssiv*
axpansion off c r e d i t .
Sow. 1st no naks claar that l t 9 s not our intention to shut
off tho flow of c r e d i t , or shut ott tho flow of money. We would
anticipate that a growing economy requires some sddltlon to tho
money supply; i t requires c r e d i t . But that should be kept In
proportion to what the economy r e a l l y neede. Wo don't vent to
finance tho inflationary froth in the economy.
HUNTS&-CAULT: Alright. Mow you Just mentioned that you
plan to focus on the money supply, and that vas the most dremetic
part of your etrategy v tho most radical departure. Could you
explain exactly what that means, focussing on tho supply rather
than on tho p r l c e t which la Interest rstesT
VOLCKSR: Well, we get into s very technical area here, but
we've been concerned about tho lncreaae i n the money supply ss m
normal part of our operation. He have changed tho techniques
we've changed the emphasis by which no approach tho asms o b j e c t i v e s
that we had before. We've put more emphasis sn what you refer to
mm the supply s i d e . He controlled t h i s because tho bulk off the
money supply c o n s i s t s of bask d e p o s i t s , and In * modern economy
l i k e ours* the flow off bank deposits or tko t o t a l of bank deposits
la ultimately controlled- by how many reserves banks hold. And we
can control the amount of reserves* That control to not perfect #
but ws're putting more emphasis on c o n t r o l l i n g tho amount of
reserves, which, iu turn~f controls the supply off money.
HUSTStt-GAULT* V e i l , now how exactly w i l l that Impact upon
i n f l a t i o n and help you to achieve your goal?
VOICKBS: V e i l , you know there ~ the c l a s s i c
Inflation i s too much money chasing too few goods*
mm we bring t h i s supply of money into accord with
non-inflatlonary economy# you achieve a proportion

d e f i n i t i o n of
and ultimately,
the needs of a
between the

Mount of money and the Mount of foods. And at that point, we
can return to stable oeonoalc conditions «o far as inflation i s
concerned. How. we can't move there all at one etep, but I think
tho actions oa Saturday r«itcrated o«r firm intentions to do so.
L«t ma make ont point, too, upon which t think Chora's boon
some aisonderstending.• Th« aonay supply has boon growing at an
excessive rata. 1 think It'a fair to m»j. for throo or four
nontha — five aontha. X would not nso tha words "ont of control,"
hot it*a boon growing at a rato of tan poreont or s o . Is ono
popular doflnition. that's too faat. if wo looked at i t in tha
perspective of a year. I t ' s only hooa about SZ; i t ' s actually ons
of tho slowest rates of growth of thu aonay supply among aoat
countriaa in thu world, to i t haan't — X don't want to svggost
that the difference la black and whita.

1 ana.

This kind of atratogy that you've put into place on Saturday
has boon recommended olnce — going back to 1973, but tlao and
tloe again. It'a boon rejected. What warn tho reasons this
approach waa rejected la thu pastf
Well, all approaches have their advantages
disadvantages. Tha major reason wo changed now in this Immediate
situation was the fact that the aonoy supply was Increasing quite
rapidly, and the traditional approach which put more emphasis on
short-run stability and interest ratea peril ape was not very
useful during a particular period whun tho significance of the
lcvul of Interest rates i s auch harder to Judge, when the inflation
rata Itself i s high, and when expectetloos about inflation aay bo
changing. Because ultimately, the level of Internet rates la
related to thu inflation rate, and if inflation I t s e l f i s changing,
or if people's fears about inflation are changing, that impacts
the interest rate. I t ' s a l i t t l e harder to Judge what results
you're getting from interest ratea alone, ao instead of saying —
lookisg at the price of money and tho interest rate, l e t ' s look
at the money supply more directly as a aattur of emphasis.

HDHTB&-CAOLT: And the same problems that might have existed
in tho past don't exist nowT
V0LCKE1: Well, no — there's no complete certainty in this
world, but wo think this i s a technique which, under existing
oircumet«no«s. offers grester assurance that the aoney aupply
will be brought in line with our targets for this year. Taoee
target a have not been changed; they were out f i r s t a year ago;

they w n c v v i t w d tn th-a middle of the year —what wo want Co do
la coma with In those t a r g e t s . Wo *r* oat far outside of those
tar gat a. Va had a period of alow growth; then, aiore recently* a
period of rapid growth — we want to go l a between.

Than* you.

LBHBB&z Mr. Volcker. i a t f a t a l k about what's happened ao
far. Juat l a the laat four days- We've already talked about the
atock market; you don f t aee a big concern there* You think
t h e y ' l l come to their aeaaee up thara i n Row York, and everything
w i l l bo flaof
V0LCKE1: Well, 1 mm t wouldn't aay that 1 am ever without
concern about development* l a financial markets, but I do think
there la a reappraisal of values going on. Ultimately I think
t h i s should bo p o s i t i v e , becsuss the more s t a b i l i t y we get i n
thin economy, tha more c e r t a i n t y thoro I s about our own p o l i c i e s .
I think then we have a base for Judging thoso values b e t t e r , and
1 think i t ' s good for the growth of tho country In the long run.
and w i l l be good for tha atock market for that reason* The stock
market has bean depressed for years bocause of fosrs about I n f l a t i o n .
Unless we dest with that Inflationary problem.••

. . . B u t you wouldn't*•»
. . . t h e fear t h a t ' s plaguing the market ought t o bo

LSI!tea: But you wouldn't — then you wouldn't road what has
happened tha laat three days on the stock market as a s i g n that
those on Vail Straot aren't real sure that your plan I s ftolag t o

VOLCKBR: Hall, you know, there ara a lot of skoptlcsl
psoplo on (fall Streets thoro are a lot of uncertain people. I
think it's Inevitable whan wo maka some chsnss of this sort ~~
and perhaps aome actions were taken that people didn't fully
anticipate —-» there la a period of uncertainty, in one sense;
that^s unfortunate. In another sense, let mo say If they*re more
uncertain now about tha outlook for Inflation, I'm not unhappy
about that. X think they ought to bogln questioning some of
thoe* assumptions they made about persistence of inflation and
the inevitability of inflation.
LEHRERx Alright, now, on stabilising th« dollar abroad that was another purpose for your actions -~ Monday and Tucsdsy
that's just what happened.


___ wprice of the dollar went s p . bat today, Ch«

'k ddown.
own .
Uh « . . .
prle « went back


: VOLCKIBs . . . I t 414a't go back down nearly «s far as i t went
up. l a t ae aaka elaar an that. Va ar« dealing vita aarkata that
haver a Ufa of th«lr awn; a lat of people out there are trading
currencies. X 4an*t expect that aarkat to be flxad every day.
Va hiad a vary aharp and good raactloa in the exchange aarkets;
tada> i t ratraated a btt. bat the dollar laoka • lot better to M
tadav Internationally than i t did a week ago, or before the waak
and.! or two weeka ago, and better than i t ' a lookad for aoae t l a e
in tjtraa of the beelc prospect a.
! LBMKSB: And in ther abort tarn over the next faw days and
you plan to — you axpact i t to remain wore stable than
l t ' e : baaa.
• VOLCKBRi 1 think the outlook for the dollar should bo
atro igar than It waa. We're going to gat aoajo day to day aoveaeat
in t 1at aarkat* I saspect...

...Op and down...

!VOCKB«s . . . a n 4 the market w i l l bo probing for a s t a b l e
tradfng l e v e l . Aa they adapt t o t h e i r new expectatlona, yoa can
expect some upe and downs on particular daya, bat l a the and* I
think — wall, there'a Just no question that t h i s klad af aaasara
helpf the d o l l a r .


LSMftBR: Sane thing with goldT
r i c e to go down...

Obviously, In gold yoa want


.LBM1BR: . . . b u t now i t want up.
JVOLCKBtt . . . b u t gold l a . . .
JLBM1EB: And i t did tha aaao thing — I t f l i p - f l o p p e d .
jVOLCKEfti I t ' a a very special kind of highly speculative
marke t ,, aa you
a s . aaoag
h i n g s , aa
y know. The gold
gold market
aaoag other
other tthings,
l o t * vvested
s t d IIntwrcsta
f people
built Into itj there are a lot of
In t at aark«t whose — who'd Ilka to see it go epj their careers

•rat kind of t i e d up l a that prospect, so you expect sometimes
•on sccragi r e e c t l o a s l a that market. But again, the fold market
1 t ink th« ri«« l a the gold market, the r««aon i t wont up and
the r«««oa i t had a f a r t i l o ground apon will en t o M V « , were these
anil c t l c a about i n f l a t i o n . Cold has no raturn i n and of i t s e l f ;
JTOU only buy gold If yon expect th« p c i c * a t i l l t o go op f a r t h e r ,
Vhy should tha prico go ap further unless you're f e a r f u l of
luf atioa? Our purpose i s t o deal with tho*« — tha Br e a l i t i e s of
iuf a t l o o , and tho expectations of i n f l a t i o n , aad wo ll Just have
to at tho gold market react Co t h a t .

LBRftftK: Have you got a — docs a daagar o x l s t now of a
psychological chain raaction that thoso p«opl« l a tha d o l l a r aad
l a tjha gold aarkat alght roast to what happened today i a Vail
ftrent tomorrowf


VOLCUK: H « l i , t — l doa*t taka tha roactioa i a Vail
Stnjut as any reason t o change tho basic appraisal* about tho
prograa. thuro's a l o t of s a i l i n g i a Vail t t r a a t ; thoro was aa
rtx 1 l o t of buying. As you pointod o u t , tho prico want down
rat I or sharply at oau poiat during th« day, and spout aost of tha
aft 4 rnooa going up almost equally sharply. Tharo wore • l o t of
buy< rs aad a e l l e r s who were oortiag out t h e i r e x p e c t a t i o n s , bat
thatj *« P*rt of tho process. The baslo p o i n t , which X r e a l l y
have not hoard questioned, i s that tha kind of aetloaa that wo
took do go t o the heart of the inflationary problem.
I LBMlBKi Thus f a r . have you been s a t i s f i e d , p l e a s e d , d i s p l e a s e d ,
or uhatever. i n tarns of what the banka have done i a reaction t o
what) you did oa Saturday?

Are they playing the gaae tho way you waatad them t o play

VOLCK8&: Hall, the banks, of course, are a l i t t l e confused
aboujt how to adapt to some of our particular measures. That's
quits understandable; some of them are quite technical, so there
hove1 been some gyrations In the money narket. t a s i c a l l y , nothing
has liappened thore that's out of line with what might have been
•at I would make a point here. Tha banks have, in a eease.
a heavy responsibility thruat upon them. Ve are looking to
curtail their rate of expansion. In terms of the banking industry,
slowing the growth of the money supply aad slowiag tho growth of
bank, credit means you're curtailing their rate of expansion, and
they) should be lending at a less rapid speed than they have been,
and f. think their responsibility in their job, their normal

wording Job — thoy v rv tha paoplo i a a poaltloa t o do i t ; wo roly
upod thoa working within tho market — t o oort out tho demands
forjcrudlt t to put emphasis oa thoir customer aaeda» thoir continuing
euetjoaer nooda for financing expansion, thair poraonal customer
|g, and gort out tho loano that ara ugaful l a that sense from
some of tho onea that may ho financing moro purely gpoeulatlva
rttjvity. which la not vory h e l p f u l , to tha country or t o tho
cmatjooars l a tha long run* I would ougguat.
LSME8E: Thank you.
Char lay oaf
HOHTIE-CABLT: Mr. Volcker. l9o t 9 a look at aomo of your
p o l i c i e s ovar tho long run.9 What a your reaction t o tho prediction
of ^offie acoaomlata that wo ru haadlng toward a particularly naety
VOLCKSE: Hall, thara'g v b««n a l o t of talk tbont racaaalona
for aontho, aa yoa know. Vo v« had a, hj h l a t o r i c a l atandarda v a
vory long parlod of huolnmmm axpanalo*. and at thia point v for a
•ariaty of raagona, r o t a l l aalaa bmvw alowad
dovn, although tha
latagt flgnraa look pratty good9 and thara v g boon aooa lavantory
l u p . Thla la tha kind of clrcuaatancu milch l a ado t o cone a m
abotft a r*c*salon t and X ah ara that ooacara. Bat 1 alga havo tho
atro ng conviction that, l a tarma of tha growth and at a b i l i t y of
tho aconomy ovar a parlod of tirna, tho groatoat dangar la l o t t i n g
this inflation* or would hava baan l a t t l n g thia i n f l a t i o n gat out
MlftfTEB-GAULT: So you don
t agree with Secretary of tho
Treasury Hiliar who eaya wo 9 ro half-way through a receaetoa.

I VOLCKfiEz That's one way of putting i t ; wo have had aomo
declines in business a c t i v i t y ; l a tha second quarter wo had a
and la the third quarter, tho lataat figures look good. 1
think that necessarily
maang wo w i l l not hava a d e c l i n e in
fourth f quarter —f that 9 * what Secretary Millar hag referred
I don t think l t a nucaaaary or pre-ordained t or changed hy
this! program. If tho
recession — i f ladood i t f i n a l l y provaa to
bo 4 recession* wo 9 il bo — I was about to aay w a serious matter•'
Eacekatono era always a sorlouo aattar« but something that wo can
now((?) got through l a a reasonably orderly way.
ia lfiLkaly to got

Do you — huw high do you think unemployment


I VOLCKBRx I haven't got any particular e s t l a a t e i I — obvloualy
i f (business turns down, uneaployaent w i l l r i s e . That has been
the general prediction. X point out again that i t ' s been the
prediction for a good aany eon the, and the l a s t enampleyBeat
figure wo had was among the best we have had.

Tea. but we h a v e . . .

. . . t a p l o y a e n t in at an a l l - t i m e h i g h .


Right, but t h e y . . .


. . . I w«n and«rstand tho forecast that baslaese
no«t math — but
that nay havo aoao
eff act* on production; onvrnploytstnt woo Id go op. bat X havon*t
got any lnalght aa to any aoro than a graat aany oconoalata who
you can talk to aboat Just wfc«r« tho naamployaant rato aay go.
It s boon surprisingly strong in tho s«na« of balag avrprlalngly
goe ao f a r .
•a; d e c l i n e , and — l*a not toying thla month.
•OB o or theae inventories mmy b« worked down}

HUttTSl-CAOLTi go you wouldn't put any credence i n the
prediction that i t eould reach 9Z by mid-lfgO.
VOLCKER. V e i l , I ' a not going to aake s particular prediction
on Yhe unemployment r o t e .
Sow high does i t have t o go before i t becomes
s bagger threat than the 13% i n f l a t i o n rat at

VOLCK8R: X don't aee thia as an eithar-or proposition, and
l a , I auppoaa, the baalc point* If i n f l a t i o n got out of
i t ' a quite clear that that would be tho greatoat threat t o
the; continuing growth of the economy, t o the productivity of the
eco iooy, to the lnvoataent environment, and nltlnately, to eaployaent
and the ultimate threat of the greateat level of oneaployaent.


I'a not aaying that unemployment will not riee. l*a aaying
threat over a period of tlae would coae froa felling to
* s
dea with inflation rather than efforta to deal with it. How.
tha can continue — we can't forget about the seed to keep
gro rth and money restrained; we can't forget about the federal
bud [at, even during receaelon periode. That doee not mean that
int treat rataa would not go down. When the aoney aupply coaes
UQd »r control, when there's a sense of inflation coming under
con roi. the aoat natural thing in the world would be for interest
rat a to come down. The aooner that happens in a real eeae*. the
hap ler 1 would be.


What do you...

VOLCKBS: ...It's not going to happen if inflation goee «P
fore or* It 9 o aot going to go op forever.
MUBTEl-CAlfLTs What do you aay to eritlco who chargo that
ia going to create a credit cruncht
VOLCKSR: Well, I — thia word "credit crunch" ia not a word
that I use. I — credit will ho available. Vo arc not catting
off ome growth, orderly growth, moderate growth in thn anpply of
ered t. Thar* will bo enough credit to finance orderly business
toenta. orderly fcuelneee expansion* Onr vholo tactic, our
who I strategy la aimed in thn direction of providing growth in
cred tt hut Uniting excess.
othe at

Von 9 t that hit sone custoaers harder than

VOLCKBR; In the short run, an this gets sorted oat* some
peop e are going to find credit perhaps harder to bay than they
did afore.

Any particular category of people 0T class

of • •
VOLCtCCR: X think that will bo worked out through tho market
is. t wouldn't like to divide it up by categories of people;
l d ether divide it up by categories involving need. Where
ther is a legitimate need for credit* whether it's by a homo
buyc v by a consumer, or by a business man in fterms of his ordinary
oper it ions, 1 hope he gets the credit. If he s out to finance
spec latlon in the gold market, to take an extreme. 1 would think
that that is not a priority une of credit at thin point* or to
final ce speculation in commodity markets. We have aome evidence
of at me speculation in commodity markets before tho programs that
kind of speculation gets financed in part by credit, too. How.
that is not a priority use of credit in the prnsnnt circumstance.



Thank you.


Mr. Volcker. you did talk to the tmeidant or

Seer tary Miller before you made the decision and made tho announcement
on 8 iturday.

Yes* you're right.



What was their reaction?

"Right on. Mr. folckar"T

VOLCKBft: Veil. I — nobody goes into actions like this
wit • I suppose, the happy aplrit of "right on." X think there
la. i general recognition of the need for actions of this type; X
thi k the President's comments last night, the comments of the
•dm nlftration earlier, tho comments of iacr«tary Millor have
ind cated their fullest recognition snd support of this problam.
LSRRER: There was mt item in "Tho Vow York Times." I'm sure
you re swars. which ssld that when you mot with then, yon threatened
to eaign i f they didn't go along.
VOLCKXR: That was absolutely nothing to that story, and tho
kin of indications, so X say. the Presidont made last night
ind cat a his own priorities in this area.
Jtow. lot me ssy thst monetary policy alone, while i t ' s a
Important issue, i s n ' t the whole answer to this Inflationary
lea. snd the kind of reatrsiats on spending that has boon
g on the lost couple of years i s very much underrated, I
k. by some people, but i t ' s very real. The budgetary deficit
boon brought down quite sharply, and when — you can s i t hero
say you'd rather not oee a d e f i c i t .
I'd rather not see a
c i t , but lot'a not overlook the progress that's boon made.

The President slso said yesterday that wo*vo got to
keep la Bind that one o£ tho major causes of inflation i s fuel,
over which...

. . . t h e r e ' s no control,

IBHR8R: ...wo do not agree(T).
causa of inflation.

Also food i s another major

VOLCKSR: When you say "over which there i s no control"...

. . . 1 na«n. monetarily.

VOLCKSftx Veil, to a substantial oxteot that i s true. But
l e t ' i not forgot that even the increases in energy prices are not
some thing going on out there in a completely different world,
Th« producers are looking at inflation la the rest of the world;
they 're looking at inflation in the United States; they're looking
at t IO value of the dollar; we can deal with those things, and i t
a better outlook for energy prices than wo had before.

IXHRSK. And • diff«r«at kin* of producer •«• j«st iaforacd
t ' n out of d a « .

Thaok you v«ry much.

Cood *iglit c Charlayav.

Cood Bight. 4 1 B .

»«*ll s«« you tomorrow nifht.

Tti«nk you, and food might.

I'a Jla L«hr«r.