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Painful, But Inflation Must Stop

Click to see original imageCan you imagine the $68,400 median house of today costing $363,000 20 years hence? The 1946 dollar being worth as little as four cents in the year 20027 A federal budget of $8.8 trillion and the national debt rising to $9.5 trillion? These may seem like wild predictions, fantasies of someone’s fertile imagination. But if such tendencies as inflation and deficit spending continue as they have done in the 1974-1982 period, these predictions may be on target, say United States Chamber of Commerce economists. Furthermore, the average worker who now earns $15,000 a year will have to make $80,000 a year just to stay even. “We often are accused of being alarmists,” said chamber senior economist Martin Lefkowitz, “But unless trends change, our calculations will prove more realistic than people like to think.” In 1974 the chamber made these predictions: ”Based on continued deficits spending and inflation, the dollar, which had shrunk in value by 60 cents in purchasing power from 1946 to 40 cents in 1974. would further shrink to 16 cents in purchasing power by the year 2002.” The forecast also envisioned federal government spending of $762 billion a year and a federal debt of $1.2 trillion. A car costing $3,000 in 1974 would cost $7,500 in 2002; a $25.000 home would cost $62,500, and a $4,000 college tuition would cost $10,000.” The period after 1974 proved to be one of rising inflation and record deficit spending. The chamber estimates proved conservative, and the levels forecast already have been reached in some cases. Taking stock, Lefkowitz said: “The 40cent dollar of 1974 is now worth 20 cents. Federal spending in fiscal year 1983 may be kept down to $785 billion, The federal debt, based on optimistic forecasts, will be $1.2 trillion by the end of fiscal 1983. The median house now costs $68.400.” So the chamber’s economists have revised predictions, foreseeing in 2002 the four-cent dollar, a median house costing $363,000, the $8.8 trillion federal budget based on a 13.3 percent annual rate from 1974, and other sharp gains already mentioned. The recent slowdown in the inflation rate could be a positive factor if it continues. in any event the implications in terms of national economic crisis are obvious. What can be done to reverse the critical trend? To find the causes in past policies and performances and apply effective solutions in the future with courage and unity of purpose is the sobering challenge of national leadership – and there is no time to waste.