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E1117 West 5th Street Austin, Texas 78703 REALTOR Representing all types of properties In Austin and Central Texas Interesting & unusual property a specialty. 477-3651 1311 Spiders . . . the first thing that springs to mind when you mention the word “web.” But, our web is a press -high speed and economical! From newspapers to quality book work, in black and white or color. Call us at 442-7836 for a quote on your next project. Em loyee Owned and Managed COMMUNICATIONS, INC. AUSTIN, TEXAS 1714 S. Congress 442-7836 Data Processing Typesetting Printing Mailing 015eiNer Don’t Miss An Issue. PLEASE SUBSCRIBE in order to buy homes and cars, then inflation reduced the real rate of interest and caused the houses, and sometimes the cars, to increase in value. Farmers received profitable prices for crops and also gained as the real value of mortgages fell while land values increased. People living on social security were not hurt because their benefits were indexed to inflation. The poor did not fare badly because of fullemployment policies. On the more cynical side, what does inflation matter if you have no money? Banks and investors, on the other hand, suffered losses. Inflation lowered bond prices and lowered the real value of financial assets. Disinflation was another matter. The Fed tightened monetary policy which raised interest rates. This reduced investment and led to a rise in unemployment and the deepest recession since the Great Depression. Unemployment, which reached 10.3 percent in 1982, was used as a cudgel to beat down wage increases. This, and the fortuitous oil glut brought down inflation. Investors gained as lower inflation raised real interest rates and thus the real value of their bonds and other fixed rate assets. The key player in the disinflation campaign was Fed Chairman Paul Volcker. Volcker, as Greider explains, is one in a tradition of strong chairmen. After being appointed by President Carter in October of 1979, Volcker pursued a tight money policy, independent of Carter’s reelection needs. This was possible, Greider explains, because the Board was given “insulation from political control.” This allowed Volcker to pursue banking interests ahead of Carter’s political interest, and it would later allow Ronald Reagan to shift a great deal of the blame for the deep 1982-83 recession onto the insulated Fed. This interpretation of history has raised some hackles. Business leaders and economists, who consider themselves objectively concerned with the national interest, have defended Volcker as the nation’s savior from sinful inflation. They support the Fed’s insulation from political control because it enables the Fed to pursue unpopular policies in the name of “what is good for America.” But insulation from political control is insulation from democratic control. Greider’s argument suggests that the Fed, as well as business leaders and economists, are in effect proponents of the interests of financial capitalists and that these interest are in conflict with those of workers and farmers. Even if one does not want to join the fray, the book offers a fine discussion of the history of the struggle over monetary policy in this country. By first analyzing how monetary policy, and thus inflation, affects classes in different ways, Greider clarifies the goals and impact of the Populist struggles of the last hundred years. The silver currency were demands for an easier monetary policy that would facilitate higher prices. In other words, the Populists were demanding inflation as a solution to their need as farmers faced with declining farm prices, and debtors faced with high real interest rates. Sound familiar? The implication is that the lessons of the 1880s, 1890s, and 1900s, taught by the Southern Farm Alliance and the Populist Party, were forgotten when all joined in to exorcise inflation under the banners of austerity and Reaganomics. Yes, those who fail to learn the mistakes of history are bound to repeat them. Hence the importance of understanding the “secrets of the temple.” etcflzteca 2600 E. 7th St. Austin, Texas 477-4701 vegetarian food THE TEXAS OBSERVER 19