Monetary Policy Blamed for Economic Woes
Titus, Nancy Raiden, THE JOURNAL RECORD
By Nancy Raiden Titus Oklahoma's economic problems in the 1980s were caused in part by a failure in monetary policy in the 1970s, a Federal Reserve Board governor said while in Oklahoma City Thursday.
Wayne D. Angell, one of seven members on the board of governors of the Federal Reserve System, suggested that a clear monetary policy in the 1970s would have softened the overall impact of the economic problems from which Oklahoma is emerging.
``Oklahoma had a significant asset priority adjustment in the 1980s'' he said. ``It was very significant and happened because some people thought the price of oil would reach $50 a barrel and possibly even go to $100 a barrel.''
Angell was in Oklahoma City for a joint meeting of the Federal Reserve Bank of Kansas City and its Oklahoma City branch. His comments were given at a luncheon for area bankers and business people.
He said he was optimistic about the future of the country despite the recession but said using interest on bank deposits at the Fed has little chance of becoming a reality because it would be seen as a revenue loss for the taxpayer.
``The reserves banks are required to keep are one reason the Fed makes so much money,'' he said.
Last year, the Fed made a profit of $23.5 billion after $1 billion went to operating expenses.
``This (profit) is contributed to the revenue stream of the United States. Our ability to do that hinges on the requirement of banks to put money in the Fed without interest.''
He also discussed the general goals of monetary policy and said the most important economic task ahead for the United States in the near future is establishing free trade with Mexico, an event that will have important ramifications into the next century.
``I do not believe there is any decision between now and June that is as important'' as the General Agreement on Trade and Tariffs and free trade with Mexico.
``I am an advocate of free trade with Mexico. I cannot tell you how enthusiastic I am for it,'' he said. ``It will impact the well-being of the workers of America and the well-being of the consumers of America. It is an important opportunity for the next century.''
He said the well-being of the citizens of Mexico also is in the national interest of the United States. The influx of people from that country cannot be stemmed without major changes within the Mexican economy that provides economic benefits to the masses.
``We will never be able to build a fence high enough to keep them out.''
He said the improved Mexican economic situation that free trade would bring is the only way to address the rising birth rate in that country, short of the forced abortions which China has required.
``We must move forward and away from protectionism or backward and into protectionism. Protectionism is a very dangerous event,'' he said.
``Everybody wants competition except in what they are doing. Monetary policy would be incapacitated if world trade stumbles and falls. It is most important in terms of economics. The GATT must go forward.''
A major roadblock to trade agreements has been agricultural subsidies, which are vehemently opposed by Angell, who maintains a partnership interest in a 3,000-acre farm in Kansas.
He described himself as an expert on the subsidies, ``which absolutely do not benefit farmers. They benefit landowners'' by driving up the price of land.
Angell cited Eurpoean agricultural policies as a focal point in the success of unification on that continent. …