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Show Page 6 The UTAH INDEPENDENT cross rates. Businessmen in every country could have confidence in the currencies of other countries. In final settlement, gold was the one CRUNCH when the Reserve tightened up on commodity to those who were still legally allowed to get it. The supply of gold is governed by nature; it is not, like the supply' of money, subject merely to the schemes of demagogues or whims of politicians as under a fiat system. Nobody ever thinks he has quite enough money. Once the idea is accepted that money is something whose supply is determined simply by the printing press, it becomes impossible for the politicians in power to resist the constant demands for further inflation. Gold may not be a theoretically perf ect basis for money, but it has the merit of making the money supply and, therefore it sets the value of the monetary unit, of governmental independent and 1 political pressure, which is of tremendous merit. When a country is not on a gold standard, it can be completely impoverished by the political decisions of the monetary managers. The U.S. is now suffering from a International crisis. liquidity term for liquidity is a short-han- d the sum of all funds and credits available to central banks and official institutions that can be used to meet balance of payments deficits. A RAZORS EDGE A statement made by the former chairman of the Federal Reserve Board is most timely. To recall the time frame it was in the Spring of 1968 w hen our balance of payment problems were nothing compared to the problems of today, with 968 deficit of .4 billion as compared to 10. billion deficit. So you can see the very serious condition we face today. Martin's statement followsAVe ts have an intolerable deficit, which goes side by side with an intolerable deficit domestically. Both of these have to be corrected and have to becorrected over the next several years or the United States is going to face either an uncontrollable recession or an uncontrollable inflation. Now let us look at these two conditions, recession probabilities and inflation probabilities. ecession Many will recall the year 1966 referred to as CREDIT 1 1 1 balance-of-paymen- Federal Recession; Many will recall the year 1966 referred to as CREDIT CRUNCH when the Federal Reserve tightened up on money supply and caused, id their own words, great strain in 1966" The years 969-7- 0 have been described as SUPER CREDIT CRUNCH This action triggered off the stock market decline to the May, 1970 level of 627 on the DOW. All this happened because of a tight monetary policy by the Federal Reserve. Just how is this condition brought about? Simply stated the reserve positions of the commerical banks are contracted and the tightening process takes over, which shows up with a six to nine month time lagOn the international monetary scene, the USdollar is the primary reserve currency. Sharp contraction in the international reserve currency base could bring about a world recession, just as a contraction of the commercial banking reserves brought about the 1966 CREDIT CRUNCH. Needless to say, the 1929 crash was caused by the same influence of the Federal Reserve on the banking reserves. So there you have it. A univerally acceptable manipulation The Paper That Dares To Take A Stand February 22, 1973 recession is a possiblity. am not saying that we are in a depression at the present world-wid- e time.Confidenceis a key element in the operation , of an exchange economy, be it domestic or international. A lot depends on keeping this confidence. The principles underlying the case for inflation: he United States monetary system is described as an irredeemable paper currency, since there is no intrinsic value behind the currency in the form of gold or silver, or for that matter, any other commodity, istory should be a great teacher for us. e should listen to this great scholar before it is too know of no government or late, society that has survived on an irredeemable paper money, but we can point to numberless societies and economics where inflation was ruinous: namely, our own under, theContinentalCongressfrom which the expression came. It's not worth a continental." Our economy is inflationary biased and, therefore, as 1 see it, the probabilities are greater on the inflationary side than on the recessionary, but neither one will be ruled out. We have to cautiously watch the various indicators and interpret their signals as the railroad engineer searches out in the black of night with his beam of light to assess the condition of the path we must follow. CAUSE OF DOLLAR CRISIS What is the cause of the monetary crisis ? The primary blame belongs to U;S. monetary policy, and secondary the masking of the basic demand pressures with a system of price and wage controls, so states the Wall Street Journal Editorial Februar14, 1973.Afear of inflation weakens the dollar because inflation makes U.S. goods more expensive relative to foreign-mad- e goods and the less competitive a nation is, the greater the trade deficit is likely to be. The U.S. economy is inflationary biased, hence, the future prospect is one of bouts with inflation and controls. The combination of the increasing committment to full employment and the bursting federal programs of the sixties and seventies have added an inflation bias to the economy which will be difficult to defuse. A steady rise in the level of prices is but one of the obvious symptoms of debasement of the currency which results from improper fiscal and monetary policy of the federal government. What is the cause of the monetary crisis? An increase in the money supply. That, is, the printing of money by the Federal Reserve and more accurately expressed the creation of money through the commercial banking system as the creator of credit. T his has been brought about by federal budget deficitsAn ever increasing share of the nation's output has come under the direct or indirect control of theFederalGovernment. Thiswill continue to lead to chronic with future budget deficits, increases in the money supply by the Federal Reserve. It is naive to assume that monetary policy can hold the line on inflation in the face of deficit spending.Theeasy money and credit conditions that have prevailed in recent months have been seriously inappropriate in the face of the surging economic b oom. It is impossible to control interest rates and simultaneously pursue an effective monetary policy. Directly related to the increase in money supply is the balance of payments problem. Here again we have huge balance of payments deficits. Department of Commerce disclosed that inDecember imports topped exports by 563 million, bringing the full year trade deficit to 6.46 billion up from 2.7 billion deficit in 1971. Little improvement We are r. Shultz warned, forecast forI973, as a matter ot fact, the latest monetary crisis will continuing a strong system of price widen the gap in the deficit for the and wage controls. Recent economic first quarter of 1973. Weakness international the weakness, developments additional creates need to administer these controls in deficits create additional deficits. For 1972 the U.S. wound up a way that will further reduce the We are $10.1 billion in the red on what is rate of inflation. determined to do that. called the official reserve balance. Onanet liquidity measurement basis When the truth finally comes out, there was a 13.78 billion deficit-Ththe administration will exert every net liquidity measurement for the effort to make the international balance of payments counts nearly monetary turmoil look like it was all the net outflows to foreigners in someone elses fault besides the private as well as governmental governments.Theconsumer will be dealings and finally produced a blamed for purchasing foreign 1972 merchandise trade deficit of goods, the laborer for wanting 6.82. higher wages, and the business man It is sad to note that the reporting for making a profit. A case for methods used by the government blaming businessmen, especially always tend to paint the picture the multinational companies, is how the government wants it to be. accusing them of If it is for our good, government already prepared the villians. Wall Street morality encourages its figures to being 13, 1973 reports lie to us. Mr. Volcker was sent on a JournalFebruary secret mission around the world multinational corporations control such vast quantities of money that offering to devalue the dollar. This international was at the same time that President they can precipitate Nixon reported the dollar would monetary crisis by moving only of their funds from not be devalued. Oh yes, we small portions to country, a government shouldn't forget the President is to country study concludes.Thebig companies ask Congress to authorize 10 and banks can outgun even the devaluation of the dollar by raising worlds central banks in the price of gold to $42.22 per international currency dealings, ounce. We are being sold a bill of the massive study by the Tariff goods that dollar devaluation is Commission contends. And though good for us. The Wall Street absolves most Journal reported on Wednesday, the study multinational concerns of February 14, 1973, Businessmen in across the nation indicated solid destructive, predatory motives, their currency dealings, it says that support for President Nixon's much of the speculative money decision to devalue the dollar 10 such and press for improvement in the surge during currency crisis, as the current turmoil in exchange nation's trade relations abroad. is - 1 e There is, in short, yet another world monetary crisis. But, oddly, it's a crisis caused more by fear than by fundamentals And, again oddly, its a crisis that is actually good for America and its dollar, so states the journal in parroting the administration. A broad brainwashing program has been carried out by President Nixon, Federal Reserve Chairman Arthur Burns, Treasury Secretary George P. Shultz, and Herbert Stein, Chairman of the Presidents Council of Economic Advisors. Mr. Shultz Monday night emphasized the the devaluation would be good for the American the consumer, worker, and businessman. dictatorship is Economic again being threatened. The administration warns it will have to toughen enforcement of Phase 3 price and to offset the wage control devaluations impact on prices. markets, stems from the multinationals. Multinational companies lost millions of dollars in the dollar devaluation of 1971. Is it any wonder that they desire to protect the stockholders assets now by selling the dollar short? There will be some businesses that will get a blessing or a curse from dollar devaluation, and perhaps both over a period of time. Those companies that are heavy exporters or that have been hurt by competition from imports were of supportative devaluation. The nations largest especially industries the auto and steel stand to gain the most. Imported car sales may fall this year for the first time since 1962 as foreign car prices are raised because of devaluation. Steel makers lost 18.4 percent of their domestic market to imports during the last half of 1972. Agricultural exports should Continued On Page 9 G 0 0 D 0 0 0 LISTEN TO LARRY WILCOX 6 3 p.m. Monday thru Friday p.m. D 0 KLAT D LISTEN TO D SILVER 0 NIELSEN & DRAPER 0 Box 402 Sandy, Utah 84070 Call: 571-065- 3 BILL MORRISON 0 Discount for Custom Orders Buy before prices increase 9 a.m. 0 0 D 1600 on the dial 328-297- 7 Noon Saturday To Talk With them Call: Local or Toll Free. si o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 nil |