Newspaper article THE JOURNAL RECORD
U.S. Creates Conditions for Runaway Inflation
Our trading partners in Europe, South America and Asia are not so complacent about it. Their often unspoken wonder is that it already hasn't happened to us.
The stage is set. Fears of recession began to fade in August as economists cautiously suggested economic expansion had revived. The budget deficit has ceased to be a major issue. And reduction of the $3 trillion national debt (it has tripled in eight years) is not even on the agenda.
Right now in the nation's capital, Congress is budgeting $110 billion in deficit spending, the limit imposed by Gramm-Rudman. (Actually, the deficit is more than double that amount because of off-budget items.)
How dangerous is the course we're taking? Very dangerous, says Harry E. Figgie Jr., chairman of Figgie International, Inc. and former co-chairman of the Grace Commission on spending. New efforts to bring the Federal Reserve, our central bank, under greater political control add to the fears of those who see the possibility of economic disaster ahead. ``Democratizing the Fed'' would substitute political expediency for sound economic policy.
While hyperinflation is by no means a certainty for the United States, we have created conditions that lead to its development, Figgie points out.
Economic analysts cite several factors in the current economic climate in the U.S. that we have in common with the pre-hyperinflationary economics of Argentina, Brazil and Bolivia:
- Large deficits.
- Deterioration in our international balance of payments.
- Calls for protectionism.
- Eroded confidence in our national curency.
- Our currency's declining international exchange value.
Add the fact that the U.S. has major debt exposure in Third World countries worldwide, its domestic private debt has grown dramatically this decade, and government guarantees of additional private debt not secured by sufficient capital reserves (example: the savings and loan industry), and the picture dims even more.
Figgie observes that monthly inflation rates of up to 70 percent have plunged Argentina into economic and political chaos. …