Word: interest
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Dates: during 1970-1979
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...will be able at last to control the availability of credit, as opposed to just its cost. After a full decade of high inflation, economists are pretty much agreed that the levers that have traditionally been used to control the flow of money into the economy?namely, the key interest rates that the Fed manipulates?have failed. This is in large part because the traditional concepts of money itself are outdated...
...Street. The policy danger posed by this credit proliferation is that a tight money strategy may indeed cut down the growth of the Fed's "official money," but spending would just keep on surging and spurring inflation anyway. Urges Wall Street Economist Henry Kaufman, an internationally respected expert on interest rates and credit: "What we need now is a new monetary growth target that I call the 'debt proxy.' It would include not just currency and deposits but all private domestic debt as well, a figure that is already at $2.2 trillion, or almost exactly the nation's entire G.N.P...
...ultimate challenge to the Fed's bold new initiative is, of course, the sheer virulence of the nation's inflationary malaise. In the short run, skyrocketing interest rates will just make the plague worse, since rising interest simply pushes up the cost of money. In fact, the new boost in rates makes it even more certain that the actual amount of inflation this year will far exceed the Administration's official forecast; it still maintains that the rise in prices for all of 1979 will be no more than...
Though higher interest rates are bound to crimp housing, pinch installment loans, and put a drag on sales of big-ticket items like cars, which are normally bought on credit and not with cash, most economists continue to agree that the economy is not about to drop into a free-fall plunge as it did after the oil-price shocks of 1973 and 1974. For the most part, the members of TIME'S Board of Economists predict a moderately deeper recession than envisioned in their earlier forecasts of September; but they foresee no economic tailspin, in part because the strength...
...considerable danger is the threat of an outright credit crunch. That would occur if the Federal Reserve's tightening up of money, and the resulting rise in interest rates, reach such levels that borrowers found it impossible to get money on almost any terms. Such a squeeze occurred in the summer and fall of 1974, and almost immediately forced businesses to lay off upwards of 2 million workers because of the unavailability of even short term credit...