United States or Canada ? Vote for the TOP Country of the Week !
Many hundreds of thousands of dollars changed hands during the boom. Exactly who "beat the game," to use the gambler's expression, has never been known. Certain it is, that for every man in Kansas who admits that he made money out of the excitement and inflation, there are at least fifty who say that the boom well-nigh ruined them.
Value and scarcity are two sides of the same coin. Prices reflect scarcity. Abundant products are cheap. Infinitely abundant products however useful are complimentary. Consider money. Abundant money an intangible commodity leads to depreciation against other currencies and inflation at home. This is why central banks intentionally foster money scarcity.
Still, the strength of the dollar is only one of numerous inputs and far from being the most important one in the monetary policy. Even a precipitous drop in the dollar is unlikely to reignite inflation in an economy characterized by excess capacity, falling prices, and bursting asset bubbles.
These conditions prevail today. Business is good and there are still powerful forces working in the direction of inflation. This is not the time for tax reduction. The fiscal year 1947 will see a continuance of war liquidation and occupation. During this period we shall also lay the foundation for our peacetime system of national defense.
When the present danger of inflation has passed we should consider tax reduction based upon a revision of our entire tax structure. When we have conquered inflation, we shall be in a position to move forward toward our chosen goals. As we do so, let us keep ever before us our high purposes.
With the stimulus and the discipline of a full employment budget, with the commitment of the independent Federal Reserve System to provide fully for the monetary needs of a growing economy, and with a much greater effort on the part of labor and management to make their wage and price decisions in the light of the national interest and their own self-interest then for the worker, the farmer, the consumer, for Americans everywhere we shall gain the goal of a new prosperity: more jobs, more income, more profits, without inflation and without war.
It merely reflects the output gap between actual and potential GDP. As long as the gap is negative i.e., whilst the economy is drowning in spare capacity inflation lies dormant. The gap widens if growth is anemic and below the economy's potential. Thus, growth can actually be accompanied by deflation.
All interest was in arrears, there were no means provided for meeting it, and the national credit everywhere was dishonored and gone. The continental currency had disappeared, and the circulating medium was represented by a confused jumble of foreign coins and worthless scrip. Many of the States were up to their eyes in schemes of inflation, paper money, and repudiation.
The provisions of the old-age and survivors insurance law should promptly be extended to cover millions of citizens who have been left out of the social-security system. No less important is the encouragement of privately sponsored pension plans. Most important of all, of course, is renewed effort to check the inflation which destroys so much of the value of all social-security payments.
When prices soar, the pensioner and the widow see their security undermined, the man of thrift sees his savings melt away; the white collar worker, the minister, and the teacher see their standards of living dragged down. Inflation can be prevented. But this demands statesmanship on the part of business and labor leaders and of government at all levels.
Word Of The Day