Speech

I. Inflation - We have it Trace its development II. Why Inflation? Trace G. N.P. growth Current dollar Rea I Excessive nature of expansion. III. Why has expansion been excessive? Two schools of analysis Fiscal stimulus New Economics Fine tuning '60 - '64 it worked (apparently) '64 on it didn't - why? Delay in Congressional action and The influence of Monetary policy Trace rates of expansion IV. The July I fiscal package Prior to June heralded as a must Digitized for FRASEIRm mediately following enactment http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis IV (Cont'd.) 2. Overki 11 Rapid reduction in growth Predictions of recession Must keep interest rates down Housing, etc. G.N.P. to 10 billion advance - third quarter Some of us were skeptical Bel ief While excessive Federal spending coupled with massive budget deficits generates intense pressure toward monetary expansion, Fiscal policy effective as an economic stabilization influence only in so far as monetary management makes it effective. Commerce estimates raised for 3rd quarter - 10 to 15 - likely higher How about 4th quarter? 1st quarter of 1969? Money rate of growth may be slowing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 3. Too short a period to tell. If it is - 1st quarter of '69 might ease off If not - strength through 1st quarter. Finally - What do we want? Accept 5-6-7% inflation to Hold interest rates low for a time Hold unemployment at 3 1/2% Hold business profits high Or are we willing to accept Temporary reductions in profits Increase in unemployment Higher interest rates for a time. To my view We must take the relatively minor pains of correction if we want long-run stability, optimum economic growth, and further expansion of living standards. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Darryl R. Francis (1968, September 18). Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/speech_19680919_francis

@misc{wtfs_speech_19680919_francis,
  author = {Darryl R. Francis},
  title = {Speech},
  year = {1968},
  month = {Sep},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/speech_19680919_francis},
  note = {Retrieved via When the Fed Speaks corpus}
}