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T i l VAC M I L - LSMBft WORT "F4UL fOLCXI»" 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 COPTIICHT (c) 1979 IT IDUCATIOMAL IKOAOCAtTlMO COKPOtATlOV Matto«al tw—9 Co«c«et ««*« »i«hoU 4 P»bliC talacioo* 112/245-0440 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* (MUSIC) LH E : E RR 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•* O the price side, the Dow Jonee lad as t r i a l average waa down n 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 Inflation. 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. York. lobert MacMeCl la o f f ; Charlayno ttuster-Gault i s i n Mew Charlaynet """ 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 . Jlmf LBBtBti tot X would guess, Mr. Volcker. that many of those exports are saying today that maybe they woro wrong. Vould you agrooT 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*. (OVBRXALK) 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. UHRSX: 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. Alright. Thank you. CharlaynsT 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. M w you Just mentioned that you o 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 m make ont point, too, upon which t think Chora's boon a 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. miuTftftVCAQLT: 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 VOLCKIXJ 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. H H B - A L : And the same problems that might have existed D T &C O T 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 . W *r* oat far outside of those o 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. HUNTBR-CAtfLT* Than* you. Jlwt L H B z Mr. Volcker. i a t f a t a l k about what's happened ao B B& 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 a ever without m 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.•• UEHBBBs FOLCKBR: dissipated. . . . 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 work? 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. V0LCK81: LEHRK1: Right. ___ The wprice of the dollar went s p . bat today, Ch« 'k down. Uh « prle « went back d o w n . Why . . . (OVBRTALK) : 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. ! L M S : And in ther abort tarn over the next faw days and B KB weeks, you plan to — you axpact i t to remain wore stable than l t ' e : baaa. • V L K R 1 think the outlook for the dollar should bo OC Bi igar than It waa. We're going to gat aoajo day to day aoveaeat atro in t 1at aarkat* I saspect... IBNRBR: ...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 . 1 tha LSMftBR: Sane thing with goldT r i c e to go down... VOLCKBRx Obviously, In gold yoa want ...gara... .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 know. The gold market h a s . aaoag other tthings, a y gold m has. aaoag other h i n g s , a lot * v s t d I t bilt I t i h f vested Intwrcsta built Into itj there are a l lot of people 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 f 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? It? Are they playing the gaae tho way you waatad them t o play V L K & Hall, the banks, of course, are a l i t t l e confused OC 8 : 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 expa'eted. •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. What a your reaction t o tho prediction of ^offie acoaomlata that wo9ru 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 of MlftfTEB-GAULT: So you don f 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 w f i n a l l y provaa to bo 4 recession* wo 9 il bo — I was about to aay a serious matter•' Eacekatono era always a sorlouo aattar« but something that wo can now((?) got through l a a reasonably orderly way. HUNTfiR-CULATx ia lfiLkaly to got Do you — huw high do you think unemployment 10 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. HUHTSR-CAULTi VOLCKER: 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 . MUHTIR-CAULT: Right, but t h e y . . . VOLCKtRz . . . 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 . NWTSR-CAULT: 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. th How I'a not aaying that unemployment will not riee. l*a aaying eater 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 r UQd » control, when there's a sense of inflation coming under roi. the aoat natural thing in the world would be for interest con rat a to come down. The aooner that happens in a real eeae*. the hap ler 1 would be. 11 MUNTSt-CAULti 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 atratagy ia going to create a credit cruncht your 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. HOHTEa-GAULT: 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. MUHTgR-GAOLT: 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 t oper i 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 a me speculation in commodity markets before tho programs that t kind of speculation gets financed in part by credit, too. How. that is not a priority use of credit in the prnsnnt circumstance. proc f HUNTfta-CAULT: Thank you. Jim? LfiHREtt: Mr. Volcker. you did talk to the tmeidant or Seer tary Miller before you made the decision and made tho announcement on 8 iturday. VOLCR&R: Yes* you're right. 12 LR I B RR What was their reaction? "Right on. Mr. folckar"T V L K f: Veil. I — nobody goes into actions like this O C Bt 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. V L K R That was absolutely nothing to that story, and tho OC X: kin of indications, so X say. the Presidont made last night ind cat a his own priorities in this area. Jtow. lot m ssy thst monetary policy alone, while i t ' s a e 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... V LKR OC E: . . . t h e r e ' s no control, IBHR8R: ...wo do not agree(T). causa of inflation. tight. Also food i s another major V L K R When you say "over which there i s no control"... OC S: LtttRERi . . . 1 na«n. monetarily. V L K fx Veil, to a substantial oxteot that i s true. But O C St 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. •efce 13 IXHRSK. And • diff«r«at kin* of producer •«• j«st iaforacd t ' n out of d a « . (LAUGHTER) itRHBR: Thaok you v«ry much. Cood *iglit c Charlayav. KUOTS1-CA0LT: LtMKIlx Cood Bight. 4 1 B . »«*ll s«« you tomorrow nifht. Tti«nk you, and food might. (MUSIC) I'a Jla L«hr«r.