Word: economists
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Dates: during 1960-1969
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Most of the critics are directing their fire from grounds first staked out by Economist Milton Friedman, who contends that the nation's money supply should be expanded within a fairly steady range of 2% to 6% a year-just enough to match the "normal" pace of economic expansion (TIME, Jan. 10). To go above or below these limits, he says, is to invite inflation or deflation. The board in recent years has shifted radically and rapidly from tight money to easy money and back again, sometimes increasing the money supply at an annual rate...
...taxes to slow inflation and narrow federal budget deficits, the board did the job by restricting money. Then Martin calmly absorbed the resulting criticism, most notably after the "credit crunch" of 1966. To blame the Federal Reserve for that, says Arthur Okun, who was Lyndon Johnson's chief economist, is "like scolding a driver who just avoided hitting a jaywalking child because he stopped short with four feet to spare...
...inevitably depress corporate profits. Two weeks ago, Treasury Secretary David Kennedy began warning openly, although the issue was never much in doubt, that the 10% tax surcharge may have to be extended a full year beyond its June 30 expiration. Last week Paul McCracken, the President's chief economist, warned the Joint Congressional Economic Committee that current tight-money policies may have to be maintained throughout 1969. It is now considered quite possible that commercial banks will once again raise the prime interest rate, which is already at 7%. Any further increase would make it that much costlier...
...theory that low-wage jobs are better than none at all, Neil Jacoby, a U.C.L.A. economist and former Eisenhower adviser, urges an easing of minimum wage laws to encourage employment of marginal workers. Ultimately, the best way of reconciling price stability with high employment is to increase labor productivity by means of expanded job training among the semiskilled and the unskilled. Thus Nixon's proposal for giving private enterprise tax incentives for ghetto job training could combat inflation at the same time that it helps serve other social needs...
...successful drive against inflation would cause some dislocations in the job market. It would also temporarily result in generally lower increases in corporate profits, returns on investment and wages. "If we do manage to restore relative price stability, it won't be painless," says Norman Robertson, economist for Pittsburgh's Mellon National Bank. Inflation is so pervasive-and the task of stopping it so wrenching-that the pain is likely to be shared in some degree by almost every American...