Success or Failure of Tight Policy against Inflation.

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Success or Failure of Tight Policy against Inflation.

Author:: Steindl, Josef

Scope:: Typoskript, 7 Blätter, 7 Seiten

Year of publication:: ohne Datum

Language:: English

Note:: Unveröffentlichtes Typoskript.

Topic:: Economic policy

JEL Classification:: E31 [Price Level, Inflation, Deflation]; E52 [Monetary Policy]; E62 [Fiscal Policy]

Shelfmark:: S/M.75.1

Use and reproduction license:: In Copyright

Access:: Free access

DOI:: https://doi.org/10.48671/nls.js.AC14446136

Success or Failure of Tight Policy against Inflation. I am not going to discuss the merits or the costs of restrictive monetary or fiscal policies in general. I merely want to discuss whether and how far they are sucessful in achieving what they promise: A drastic reduction of inflation or (to be discussed to-morrow) of budget deficits. In parenthesis it may be noted that the choice between monetary and fiscal tightness, in relation to the one or the other aim is not irrelevant: In other words various types of restrictive policy may be contradictory in relation to various aims. The high interest policy, by dammaging private investment, housebuilding and consumer's credit, will inevitably lead to higher budget deficits. (One has to bear in mind that not only real but in fact the money rate of interest is relevant, insofar as long term credit with fixed interest is concerned: Whoever considers an eventual reduction of interest and inflation rates will be reluctant to borrow at 22 p.c. The use of flexible interest in long term credit is not yet general. Moreover, the high interest, for quite the same reasons, is a severe direct burden on the budget. On the other hand, a policy of increasing taxation, indirect, but also direct (if trade unions base their demands on take home pay) will raise prices and wages, and so facilitate the the continuing merry go round of prices shifted to wages and

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