Speech

FROM I ’ Darryl R. Fr‘ anciis Speech before Osceola, Ark. Rotary Club At Osceola, Ark. on August 30, 1966 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis NATIONAL FINANCIAL-TRENDS AND AGRICULTURE R today - H re - The ir Jemand. Government's concern with optimum utilization of resources. Production. Plant - Labor. A necessary influence to long-run stability. Accepted doctrine among economic thinkers. The doctrine in action - from 1961. Public programs The tax cut - a series over the period The Vietnam war The resulting fiscal pressure. The high employment budget. Reinforcement by monetary policy Normal counteraction absent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 2 - Rates of growth of money. 6 from June to June. Supply fell in July and August to date. The Fiscal-Monetary Mix - is^Dual expansionary forces The build-up to excessive demand. Over-taxation of our ability to produce. Plant capacity - 93% (over optimum level) k Labor capacity - (4 million vs. 4 million plus) Prices - Wholesale - steady '58 - '64 Starting rise from n^i^964 (64 to 65 Rises have accelerated (so far '66 about 4%) Industrial component since last year 3% -1965 year 1.49% Cost of Living - '58 to '64 - 1.2% annual rate. \ Past year at 3% Since Jan. '66 - 3 1/2%. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -3- Money market reactions - supply and demand. Tremendous demand for credit. Government Business to meet demand xpansion Past 12 months -18% Jan. to July 22% May to July - 32% annual rate. The resulting tightness in money markets. Despite record growth of money supply. Demand forces rates upward What State of economic intoxication may lead to National economic frustration. Everybody has it so good. Close our eyes to threatening clouds of inflation. We seem unwilling to take chances with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -4 - our present comfort to do what's needed to assure long-run well-being. How it can be solved - with a lag Fiscal adjustment Reduce spending Increase taxes - while holding spending. Restore the Fiscal-Monetary Mix. On monetary policy do the trick? Perhaps - if - - but If - economic forces only concern But - social and political issues involved. Restrictive monetary - expansive Fiscal Non-selective in impact. Somebody gets hurt - housing. Social to political issues. Then comes talk of legal control - And the great debate goes on. Prices continue to move - They don't roll back. Inflation continues to take its toll. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -5- The solution - Restoration of Fiscal-Monetary Mix. Agriculture - Production assets quadrupled since 1940 A greatJnf lux of capita I Less than 50 td almost 200. Concern about future - I don't share it. The long-run outlook Additional capital need Individual reinvestment Family cooperation Public Loans Cost of loan funds will vary Supplies will be adequate Credit supplements by equities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Darryl R. Francis (1966, August 29). Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/speech_19660830_francis

@misc{wtfs_speech_19660830_francis,
  author = {Darryl R. Francis},
  title = {Speech},
  year = {1966},
  month = {Aug},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/speech_19660830_francis},
  note = {Retrieved via When the Fed Speaks corpus}
}