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CONTENTS Page CHAIRMAN S OVERVIEW OF CURRENT MACROECONOMIC CONDITIONS I REPUBLICAN STAFF REPORTS 7 Inflation Targeting Goals for the Federal Reserve 8 Fiscal Policy Choices Examining the Empirical Evidence...reflected in the labor market Payroll employment gains for example averaged about 260 000 jobs per month in the two years prior to June 2000 but actually declined on average in the year and a half after...as well Prices and Inflation Broad measures of inflation continue to indicate that inflation is not an important problem at this time This is also true of core measures of inflation that remove the influence...

supply rates of deposit turnover bond yield and gross national product 1950 60 16 Chart 4 Yields on 3 month Treasury bills 19 Chart 5 U S gold stock short term liabilities to and claims on foreigners 24 Chart...recessions to counter declines in private spending and to produce surpluses in prosperous years to curb inflation reduce the public debt and free funds for private investment and Federal tax and expenditure programs...Cyclical high Cyclical low 1953 54 1957 58 1959 61 1953 54 1957 58 1959 61 U S Government securities 3 month bills 2 42 3 66 4 67 0 62 0 64 2 13 Long term bonds 3 19 3 76 4 42 2 45 3 07 3 75 Corporate Aaa bonds...

dominant questions facing economic policymakers for 1968 are First how much overstimulation and inflation are we willing and prepared to tolerate or to use an economist s phrase trade off against what level...participants is more urgent than ever in view of the continuing and growing threat of cost push inflation Third the world economy is confronted with the most serious crisis of the past two decades Continued...would create uncontrollable additional liquidity and provide the basis for an immediate burst of inflation followed by a new inter national shortage of reserves when price levels had adjusted to the new...

years than the Republican plan seven years assumed there would be higher economic growth and lower inflation in the years to come when compared with the Republican economic assumptions and perhaps most outrageously...approved by all Democrats and Republicans on the Committee the Phillips curve tradeoff between inflation and unemployment was rejected and a new model of growth economics that would guide the policies...United States mishandled monetary policy has caused er ratic economic cycles bouts of double digit inflation a crisis in the savings and loan industry booms and busts in land values volatile interest rates...

emergency conditions of the war they de manded and secured price and other controls without which war inflation could not have been moderated But all such controls must be removed at the earliest possible moment...of 1949 the volume of installment credit now at an all time high rose at the rate of 300 000 000 a month or 3 percent although total personal income was remaining stationary At all levels of income there...stability rather than instability The vigorous use of a restrictive monetary policy as an anti inflation measure has been inhibited since the war by considerations relating to holding down the yields and...

Poly 5 Eiucadon 6 Infruasct 7 Tediuogy 7 Conusiows 8 III TO MAXIMIZE EMPLOYMENT 9 IV CONTROLLING INFLATION AND ITS COSTS 11 V TO STRENGTHEN OUR POSITION IN THE WORLD ECONOMY 1 Tnds In US Tmde and Internaionau...will require real effort While inflation is down from recent peaks it is still above the level that inspired wage and price controls less than 20 years ago Controlling inflation is a priority and a challenge...Sources Bureau of Labor Statistics National Income and Product Accounts Bureau of the Census Note Inflation adjustments are made using the CPI XI a 1988 for mean family income There is much that economists...

the largest trade deficit in U S history was not likely to be turned around in the near future Inflation fell in 1986 to 1 1 per cent the lowest level in 25 years on the strength of a sharp fall in oil...off debt negotia tions with the banks are clear signals of a renewed crisis Even in the area of inflation where the surface indicators have been positive there are signs of increasing pressure The Nation...hold down domestic prices a pattern now being reversed The sharp jump in the inflation rate in January while only for one month is out of line with predictions of a modest increase in infla tion in 1987...

Supplementary staff materials 26 I The first requirement increased production 27 II The major threat inflation 29 III Governmental budget 31 IV The curbing of bank credit 36 V Reducing consumption 46 VI The...cannot be maintained if we lack the foresight to turn 1 JOINT ECONOMIC REPORT back the forces of inflation and the will to pay out of current income tfhe cost of raising and maintaining the military power...great importance of expanded production without recognizing that inflation constitutes a continuing threat to its achievement 2 Inflation invites business to seek profits by manipulation of markets rather...

to investigate are 1 Historical and comparative rates of unemployment produc tion and prices 2 Inflation and deflation caused by increases and decreases in the effective supply of money and credit and...Since the beginning of World War II the American economy has upon occasion experienced classical inflation with too much money chasing too few goods for example in the immediate postwar years and again following...and vigorous expansion of the economy should not be unduly deterred by the possibility of future inflation ACHIEVING MAXIMUM EMPLOYMENT SHOULD BE EMPHASIZED IN 1959 On the basis of the present economic outlook...

com mittee pointed out the limitations imposed by the need for main taining revenues to combat inflation In view of the changed Representative KILBuRN I feel that I must dissent from any view that treats...increased the rediscount rate by one half of 1 percent and it still appears to be most fearful of inflation which does not now exist It is true that the wholesale price index is at its highest point and the...competition in these huge cartelized industries Using monetary policy in a period of a recession to fight inflation in JOITT ECONOMIC REPORT FOR 1958 15 the administered prices of the giant monopolies is to outdo...