INFLATIONANDITSCONTROL-AgEconSearchHome.pdfVIP

INFLATION AND ITS CONTROL Everett E. Peterson, Extension Economist, University of Nebraska, and Richard G. Ford, Extension Economist, Federal Extension Service The authors of the many speeches and writings on inflation can be divided roughly into two opinion groups. One group argues that a little inflation is good because it stimulates economic growth and bene- fits most people and that steps can be taken to care for those few who are injured. The second group holds that any inflation is bad, that creeping inflation will get out of hand, and that stable prices are con- sistent with full empoyment and economic growth. The following quotations are typical of current writings on inflation: Let us not minimize the explosive potentials of this economic outlaw. In its exaggerated form-when inflation shifts from a creep to a gallop- it has bred dictators, toppled governments, ruined nations. And, when it gets so out of hand, it can kill the goose that lays the golden eggs of eco- nomic growth by discouraging the savings with which we buy the machines to increase our productivity. Even in its creepiest form, inflation robs the needy by decreasing the purchasing power of money. The things that a pension or small salary will buy shrink with each creep forward of an inflationary movement. Thus, schoolteachers, pensioners, and those elder citizens who live upon income from a fixed amount of capital, find themselves poorer and poorer. The savings upon which so many of our people rely for their support in old age, or to gain earlier independence, are constantly diminished in value. If the inflation gains sufficient power it can easily offset any interest which the ordinary savings account or insurance policy can pay. Workers who are beneficiaries of large investments in private and public pension funds find themselves among the princi