Word: discounts
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Dates: during 1950-1959
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...money as a boy, and in early manhood was something of a spendthrift. Today, at 72, Ishibashi is one of Japan's foremost economists, but a reputation for unorthodoxy persists. Last week, becoming Japan's new Premier (TIME, Dec. 24), his first act was to attempt to discount widespread impressions that he: 1) favors an inflationary policy; 2) plans unlimited trade with Red China; 3) opposes U.S. policy on Japan...
...over bigness was only a whisper compared to the uproar over tight money. Even if few understand all the complexities of the Federal Reserve Board actions to curtail credit buying, everyone in some way felt the effects. Business borrowing costs soared as high as 6% as FRB's discount rate on loans to member banks was raised to 3%, the highest point since the 1930s. Home mortgage rates jumped from 4½% to a peak 6% in some areas. As housing starts slipped to 1,100,000 in 1956, down 200,000 in a year, builders loudly blamed...
...fashioned Populist's suspicion of Eastern bankers," unloosed the first salvo. Opening a subcommittee inquiry into U.S. monetary policy, Patman explained that the hearings were justified by "the danger that the tight money policy may wreck the economy." He attacked the Federal Reserve Board for raising its discount rate (i.e., the fee charged by the Federal Reserve system on loans to member banks) from i^% to 3% over the last 20 months (TIME, Sept. 10). By thus restricting credit, rumbled Patman, the Federal Reserve Board has driven farmers, small businessmen, home and school builders to the wall...
What about rising interest rates? This, replied Martin, was "one of the problems of prosperity" which are often more difficult than the "problems of adversity." The Federal Reserve "wants interest rates to be as low as it is possible to have them without producing inflationary pressures. Our discount rate has tended to follow the market, not to lead the market...
...bankers and businessmen, the strongest danger signal is credit, which has been slowed down, but apparently not enough. Despite the tightening of money by the Federal Reserve Banks and the highest bank discount rate (3%) in 23 years, consumer credit is still rising, has climbed some $4 billion since August 1955 to an annual rate of $37.5 billion. What worries Sears's Houser and others even more than rising credit is the apparent lack of concern over mounting inflation. They fear that the U.S. is lulling itself into a state of mind which accepts inflation as the normal, natural...