Monetary Policy in Prosperity

May 6, 1964

Report Outline
Monetary Policy And Inflationary Pressure
Machinery for Effecting Monetary Control
Reserve Policy: Past, Present, Future

Monetary Policy And Inflationary Pressure

Watch on the Economy to Ward Off Inflation

Satisfaction of the general public at receiving an $11.5 billion tax cut has tended to conceal concern among some economists lest so large a dose of added purchasing power over-stimulate the economy. Although prices have not risen to any marked extent since the tax reduction was made effective two months ago, not enough time has elapsed to dispel all fear that the supply of goods and services may fail to expand fast enough to absorb the increase in purchasing power and prevent generation of an upward price spiral. Attention is being given, therefore, to the mechanisms of monetary policy through which inflation may be restrained by regulating the flow of money and credit in the economy.

By tightening credit, the Federal Resei've Board can help to dampen pressures that push up prices. But the nation's central bankers would run the risk of diluting the economic stimulus afforded by the tax cut if they acted prematurely or applied excessive restraints. Federal Reserve officials do not wish to move at cross-purposes with the national administration. However, they are not likely to abdicate their legal responsibility to take action deemed necessary to maintain a stable economy.

Credit-tightening steps in an election year would not be applauded in Congress. Easy-money forces there already are pressing proposals to change the size, composition and structure of the Federal Reserve System to assure “closer coordination of monetary and fiscal policies.” Other legislators see these measures as a direct threat to the independent status of the “Fed.” Twelve Republican members of the House Banking and Currency Committee charged, Jan. 21, that certain of the bills introduced by the committee's chairman, Rep. Wright Patman (D Texas), and others made it” adequately clear that certain members of the administration are embarking on a path of attempted domination of the monetary authority by Congress and of inflation to try to curb the economic ills of the nation both real and imaginary.”

ISSUE TRACKER for Related Reports
Jan. 20, 2023  The Future of Cryptocurrency
Apr. 06, 2018  Financial Services Deregulation
Sep. 26, 2014  Digital Currency
Oct. 05, 2012  Euro Crisis
Jan. 20, 2012  Financial Misconduct
Jan. 13, 2012  ‘Occupy’ Movement
Oct. 24, 2008  Financial Bailout Updated
Sep. 01, 2000  The Federal Reserve
Jun. 22, 1990  S&L Bailout: Assessing the Impact
Nov. 04, 1988  Behind the S&L Crisis
Apr. 26, 1985  New Era in Banking
Nov. 18, 1983  Bankruptcy's Thriving Business
Aug. 07, 1981  Banking Deregulation
Jul. 19, 1974  Banking Stability
Jul. 17, 1968  Banking Innovations
May 06, 1964  Monetary Policy in Prosperity
May 16, 1940  Revision of the Securities Acts
Feb. 27, 1937  Expansion of Branch Banking
Sep. 03, 1935  The Decline of Commercial Banking
Dec. 11, 1934  Proposals for a Government-Owned Central Bank
Sep. 12, 1934  Bank Reserves and Credit Inflation
Nov. 27, 1933  Bank Credit in Depression and Recovery
Aug. 12, 1933  Closed Banks and Banking Reform
Apr. 04, 1933  Unified Control of Banking
Apr. 09, 1932  The Glass Banking Bill
Mar. 24, 1932  The Guaranty of Bank Deposits
Apr. 17, 1930  The International Bank and the Gold Standard
Feb. 08, 1930  Branch Banking and Chain Banking
Apr. 29, 1929  Mergers of Banking Institutions
Oct. 28, 1927  The Federal Reserve Rate Controversy
May 21, 1927  Labor Banking and Finance Since 1920
Jan. 31, 1924  The Northwestern Bank Failures and the Attack on Treasury Savings Certificates
Dec. 01, 1923  Why State Banks Do Not Join the Federal Reserve System, the Effect on the System and the Issues Involved
Nov. 23, 1923  Branch Bank Controversy
Economic Analyses, Forecasts, and Statistics