Word: crediting
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Dates: during 1970-1979
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...loans outstanding to Peru and other oil-poor developing countries. Consumers in the '20s had just discovered the installment plan and were plunging into debt to buy radios, refrigerators and that new Model A from Henry Ford. Their grandchildren now have "plastic money" in the form of credit cards and owe $292.5 billion. The '20s real estate boom was centered in Florida, had created millionaires and seemed to prove, then as now, that one rarely loses money buying land. Even President Carter's insistence last week that the U.S. had a "good solid economy" stirred echoes...
Wall Street is also safer today because, in the aftermath of the Crash, the Government moved to outlaw some of the abuses that permitted the 1929 bubble. Fifty years ago, a buyer had to put down only 10% of his own money to get a stock; he could use credit for the rest. Today, under a Federal Reserve rule, customers have to put up at least 50% of their own funds. The Fed can also slow bank credit to stop speculation from feeding a boom, a step it took last week. In addition, there was no watchdog Securities and Exchange...
Belated and drastic, but unavoidable. That is the majority opinion of TIME'S Board of Economists about the Federal Reserve Board's severe credit-tightening moves. Only one of the ten board members flatly opposed the new policy. The rest generally thought the Fed's actions would help bring down inflation at last, though slowly, at the price of a recession that most still believe will be less severe than the 1973-75 slump, but deeper than was thought a few months ago. Several cautioned, however, that continued turbulence in financial markets and the economy make...
...very effective. I prefer a quick and dirty approach, and the Fed's actions are very much along that line. They will give the domestic public and foreigners the sense that we really are going to come to grips with inflation." Grove concedes that a dramatic and determined" credit squeeze would depress business activity and push up the unemployment rate. He also thinks the stock market had good reason to flop: "Some of the doubting Thomases who believed we would have at most a mild recession now realize we are going to have a real recession that could significantly...
ALAN GREENSPAN: "The Fed had no alternative," says the former chief economic adviser to President Ford. "The new reserve requirements are significant because they will increase the cost of Eurodollars, which have been one of the major sources of funds flowing into the United States," pumping up credit availability and increasing inflation. "But the key and by far the most important change is to switch to a policy of constraining money supply as distinct from manipulating interest rates." Greenspan grants that "for an interim period, interest rates could be highly unstable; the prime rate could easily...