Word: money
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Dates: during 1960-1969
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Inflation has distorted the entire economy. It has forced the Government to raise taxes, curtail its spending for social programs and reduce the supply of money. One result is that interest rates have climbed to their highest levels in a century, spreading turmoil in the financial markets and discomfort in corporate board rooms. Businessmen gloomily foresee a slow year for profits. Consumers, despite their affluence, feel financially strapped and vexed to the point of outrage at the soaring prices they must pay for both the necessities and the luxuries of life. President Nixon says that an attack on inflation...
...very close to that now." If Congress allows the tax to expire, he added, the economy could race far enough out of control to create "the possibility of a serious recession." To prevent that, Secretary Kennedy warned that the Government would have to consider further budget cuts, tighter money and perhaps, as a last and unwelcome resort, the price and wage controls that the Administration abhors...
...Tighter money, the tax fight and the mere talk of controls made investors highly nervous about the future. On the New York Stock Exchange, the Dow Jones industrial average fell four days out of five last week. Altogether, it declined 30 points, to 895. In four weeks, the average has fallen 72 points, or 7%, and is now at its lowest level since last August. All the signals from Wall Street and Washington say that more strain, sacrifice and hard decisions lie ahead for the economy...
...Johnson, but the blame belongs to the Johnson Ad ministration. In the mid-1960s, Lyndon Johnson pressed ahead simultaneously with both the Great Society and the Viet Nam escalation, without requesting an increase in taxes. Between 1965 and 1968, federal spending jumped 47%, and the Government put much more money into the economy than it took out. Johnson feared that if he asked for higher taxes, Congress would balk at paying for what some economists now call the "marriage of the warfare and the welfare states." When Johnson belatedly asked for a tax increase in 1967, Congress dallied...
...Federal Reserve compounded the difficulties by unwisely permitting the money supply to grow much too fast, partly because it had to supply funds to finance the Government debt. Last summer the board's governors rroneously concluded that the surcharge might jolt the economy into recession. The board then expanded the money supply at an annual rate of 11%, which meant that there was more money around than the increased output of goods warranted. Naturally, prices went up faster than be fore. So far this year, the board has not increased the money supply at all, but its mistake...