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PRICE STABILITY AND ECONOMIC GROWTH W. Allen Wallis Special Assistant to the President of the United States and Dean, Graduate School of Business University of Chicago This will be a rather miscellaneous talk on the vast subject assigned to me and will deal largely with matters that are obvious. My excuse for presuming to talk about the obvious is that the obvious is not the same as the familiar. Some things become obvious only upon reflection. Therefore, taking stock periodically serves to remind us of the obvious and to clarify notions only vaguely held. PRICE STABILITY Let us begin with some reflections on the subject of price stability. Everybody seems to be against inflation as they are against sin, but seldom do people try to analyze why they really ought to be. Why Inflation Is Harmful I should like to review briefly several important reasons for opposing inflation. 1. Inflation harms those whose incomes do not rise proportion- ately with the general price level. During a general price rise, all prices and incomes do not move in unison; those whose incomes lag behind suffer most. 2. Inflation tends to injure low-income groups somewhat more than the upper income or even the middle income groups. The- oretically this should not necessarily be so, but it works that way because lower income groups cannot, or do not know how to, protect themselves as do people at higher income levels. For example, in several public opinion polls, people have been asked how they think they can best protect