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- | Hello, this is David Francis, financial editor | 0:02 |
of the Christian Science Monitor. | 0:05 | |
I'd like to welcome you once more on behalf of | 0:07 | |
Instructional Dynamics Incorporated to a visit with | 0:09 | |
M.I.T.'s Nobel Prize-winning economist, Paul Samuelson. | 0:12 | |
It is now mid-November, the election is over | 0:17 | |
and Jimmy Carter is the victor. | 0:21 | |
What are the economic problems | 0:24 | |
Mr. Carter will face, Dr. Samuelson? | 0:25 | |
- | Well certainly the president-elect | 0:28 |
has a busy two months ahead of him. | 0:31 | |
He has to pick a new economic team and he has | 0:34 | |
to work out with them a program for grappling with the | 0:36 | |
burgeoning problems of the American economy, | 0:40 | |
and every day we seem to be having new problems. | 0:43 | |
Let's just look back a bit. | 0:46 | |
Since President Ford was so very narrowly defeated, | 0:49 | |
one can single out to blame for that defeat | 0:53 | |
any one of a number of factors. | 0:55 | |
And I would nominate the current economic pause, | 0:58 | |
which I believe worked mightily for the challenger, | 1:01 | |
Carter and against the incumbent, Ford. | 1:04 | |
In a sense you might say Alan Greenspan and Arthur Burns | 1:08 | |
cost the Republicans the White House. | 1:11 | |
I believe that Ford's economic advisors, | 1:14 | |
notably Greenspan and also Secretary of Treasury, | 1:16 | |
William Simon, both took too relaxed a view | 1:20 | |
of the rebound and the rate of unemployment | 1:23 | |
and were seen to seem to take too relaxed a view. | 1:26 | |
They continued to advocate steady as you go policies | 1:32 | |
and to single out inflation as the number one enemy | 1:35 | |
just when a large part of the public, | 1:39 | |
particularly the marginal, shiftable public, | 1:42 | |
was beginning to think that maybe there was | 1:44 | |
another number one enemy. | 1:46 | |
And Dr. Burns and of course his colleagues on the | 1:49 | |
Federal Reserve Board, they continued to sermonize | 1:52 | |
on the evils of inflation and to play down the seriousness | 1:55 | |
of the deceleration in the economy. | 1:59 | |
I may say that fortunately their open market operations | 2:02 | |
had begun to move towards greater monetary ease | 2:05 | |
even before the election. | 2:08 | |
But as far as the election was concerned, | 2:10 | |
it was a case of too little and too late. | 2:12 | |
Now, this curious instance of reverse political economy, | 2:16 | |
reverse economic politics in which during an election period | 2:22 | |
the ruling administration, the ruling powers, | 2:28 | |
contrive to spend less than what's been appropriated | 2:33 | |
and contrive to keep the money supply growth rather tight, | 2:37 | |
aside from its intrinsic interest to political | 2:42 | |
scientists and to economic historians, | 2:44 | |
I think carries an important moral for the future. | 2:47 | |
I don't believe the lesson has been lost on Mr. Carter, | 2:50 | |
who now not only has the option of contriving | 2:53 | |
further stimulus by recommending a new cut in taxes, | 2:56 | |
which is always a very serious decision to make | 2:59 | |
and very time-consuming in the implementing, | 3:02 | |
but Carter also may be fortuitously blessed | 3:05 | |
by the existence of a discretionary block of | 3:08 | |
unexpended appropriations that might be quickly mobilized | 3:11 | |
in early 1977 into expenditures. | 3:15 | |
- | Ah, yes, that's the mysterious 11-point-something | 3:20 |
billion dollars that- | 3:24 | |
- | We talked about | 3:26 |
- | Didn't show up the last time | |
- | On earlier tapes. | 3:29 |
- | Yeah | |
This week Dr. Arthur Burns appeared before | 3:32 | |
the Senate Banking Committee and promised to keep | 3:37 | |
a moderate monetary policy and warned against launching | 3:39 | |
new programs with the potentially large budgetary impact. | 3:43 | |
Do you see much danger of a clash | 3:47 | |
between the Fed and the White House? | 3:49 | |
- | Well, I must say that I was surprised by the | 3:50 |
testimony of Arthur Burns as covered by the newspapers | 3:56 | |
and by the TV networks. I haven't been able to get hold | 4:00 | |
of a copy of his complete prepared text, | 4:05 | |
so I must go by the selective reportings | 4:08 | |
of the camera and of your journalistic profession. | 4:13 | |
My own suspicion had been that Burns is a very astute | 4:19 | |
fellow, he realizes that this pause is a bit more | 4:23 | |
than any of us had reason to think it was earlier, | 4:27 | |
and that he and the Federal Reserve would not only | 4:30 | |
be changing their policies, in fact we know from | 4:34 | |
what happened more than 45 days ago at the open market | 4:39 | |
committee last reported that they have begun to move | 4:44 | |
slightly in the direction of greater expansion, | 4:47 | |
but I thought that in addition he would begin to give some | 4:50 | |
reassurances that the Federal Reserve would not let the | 4:54 | |
rate of growth of the money supply fall off, | 4:57 | |
it would not sit by idly and permit a | 4:59 | |
genuine recession to happen or even a growth recession. | 5:04 | |
By contrast to my expectation, he was reported to | 5:10 | |
more or less almost has thrown the gauntlet down | 5:14 | |
and to have said that inflation is still our | 5:17 | |
number one problem, that we should not have any | 5:20 | |
substantial expenditure increases and we should not | 5:26 | |
perhaps have a tax cut. | 5:30 | |
I can't imagine a more direct negation of everything | 5:33 | |
that the president-elect seems to have said since the | 5:39 | |
election date and you will have noted, David, that | 5:45 | |
Senator Proxmire of one of the watchdog committees | 5:52 | |
in the Senate, immediately rose to the fly | 5:54 | |
and has made some critical remarks about | 6:00 | |
the independence of the Federal Reserve, | 6:02 | |
if this is the way the Federal Reserve's going to behave. | 6:04 | |
More than that, the gangs ganging up because | 6:09 | |
Henry Royce of the House Banking Committee | 6:13 | |
who himself was one of those who had been sympathetic | 6:19 | |
towards moving towards a congressional mandate for | 6:22 | |
money aggregate targets, also reacted critically | 6:26 | |
to the Burns' statement. | 6:32 | |
Now, it may be that when I look at the text, | 6:33 | |
the text will say that the Federal Reserve | 6:37 | |
is as cognizant as any of us can be that there is danger | 6:39 | |
of the recovery petering out and that it will take | 6:46 | |
full measures, and so the Burns is simply talking tough | 6:52 | |
and acting, may I say sensibly. | 6:56 | |
- | Looking at the money figures, it would seem to be | 7:01 |
that he's acting rather softly and talking tough. | 7:03 | |
The money figures show rather generous gains recently. | 7:06 | |
- | No. | 7:10 |
- | No? | |
- | No, because of the Armistice Day holiday, | 7:11 |
November 11th is one of our Armistice Days, | 7:15 | |
(laughing) | 7:17 | |
there was not a complete release of the | 7:19 | |
latest week's M1 and M2 growth, but there were summary | 7:26 | |
figures released, and although they showed an increase | 7:31 | |
those increases, if you want to look at very recent straws, | 7:34 | |
were low annual percentage rates of increase. | 7:38 | |
If you look, however, at the last month, it is true | 7:43 | |
there that there has been increase. | 7:46 | |
But Burns did more than that. | 7:49 | |
This is not a question of how he was covered. | 7:50 | |
I believe he announced a lowering of the upper range | 7:54 | |
of the targets- | 7:58 | |
- | For M1 only. | 8:00 |
- | For M1 only. | |
- | He enlarged- | 8:03 |
- | But for the second time. | |
- | Yeah, but he enlarged the targets for M2. | 8:05 |
- | Oh, well, alright. | 8:08 |
That's the old Burns that we know so well and love so much. | 8:11 | |
It may well be that Dr. Arthur Burns, Economist, | 8:17 | |
has become of the opinion, as so many monetarists have, | 8:23 | |
and so many non-monetarists, that M2 is a more interesting | 8:28 | |
figure at this time to really shake and move the economy. | 8:32 | |
And so M1 not being so important in its own right, | 8:37 | |
we can do some window dressing with respect to it | 8:41 | |
Although I must say that there could be some problems | 8:44 | |
if the M1 target is tightened in a time | 8:48 | |
when ... | 8:55 | |
No, that would work out alright for a man who | 8:57 | |
really wanted to keep M2 generous, he would be given | 9:00 | |
a little leeway by that particular formula. | 9:03 | |
Well, let me say that I was not surprised that | 9:09 | |
Dr. Burns made a speech in Dallas, in which he said | 9:13 | |
he would not resign. | 9:15 | |
He had testified earlier that he had no objections to a | 9:17 | |
constitutional or a legislative change which made the | 9:23 | |
chairman of the Federal Reserve Board | 9:26 | |
serve at the pleasure of the new President. | 9:30 | |
Some people have said to me, "Then how could he consistently | 9:34 | |
"not voluntarily offer his resignation | 9:36 | |
"to the new president?" | 9:40 | |
And many a person will vote for conscription | 9:42 | |
who will not volunteer. | 9:45 | |
And Burns could very well say that the best way | 9:47 | |
to run the railroad is what the Commission | 9:50 | |
on Money and Credit and I think all previous chairmen | 9:52 | |
of the Federal Reserve have said was the best way to | 9:56 | |
run the railroad, which is to have the chairman's term | 9:57 | |
be changed to agree with the president. | 10:01 | |
But that doesn't mean that under fire | 10:04 | |
of criticism from an opposing party, | 10:06 | |
he is going voluntarily to be patsy and to resign. | 10:08 | |
He does have a grandfather clause | 10:14 | |
right to stay there 'til January 1978. | 10:16 | |
It never occurred to me that he would not exercise | 10:19 | |
that right, but I didn't think that | 10:22 | |
he would seek a confrontation. | 10:26 | |
In fact, knowing and admiring | 10:29 | |
Burns as a public servant, I thought that the | 10:34 | |
likelihood was in the other direction, | 10:38 | |
that in no time at all he would have charmed | 10:40 | |
the new president and would be well on his way | 10:42 | |
to being reappointed as chairman in January of 1978. | 10:46 | |
Well, my guess is that we will not have a confrontation, | 10:52 | |
but I must admit that the last testimony, as reported, | 10:56 | |
is not conducive to my winning that particular wager. | 11:01 | |
- | Is it not somewhat anti-democratic that a key lever | 11:06 |
of economic power, the Federal Reserves system's | 11:10 | |
control of the money system is | 11:13 | |
outside of the hands of elected officials? | 11:15 | |
- | I would say that it's not responsive to democracy, | 11:18 |
but there are a lot of people who don't trust democracy | 11:23 | |
and would like to find a way to get around it. | 11:27 | |
Just to take an example, we have a number of referenda | 11:30 | |
throughout the land, Michigan, Colorado, | 11:36 | |
earlier in California, where the electorate of one period | 11:38 | |
seeks by majority vote to tie its own hands | 11:44 | |
for a later period of time. | 11:48 | |
And you might say that, if you trusted democracy, | 11:50 | |
why don't you rely upon the electorate later | 11:54 | |
to do the right thing if they can see that | 11:58 | |
this is the right thing? | 11:59 | |
And the very simple answer to that is, candidly, | 12:01 | |
that the people who favor this referendum | 12:05 | |
think that democracy doesn't work well. | 12:07 | |
It's not really democratic, they might say, | 12:09 | |
and they would like to change the lags involved. | 12:12 | |
You're from Canada so you will forgive me if I | 12:20 | |
speak of the House of Lords. | 12:24 | |
One could be in favor of maintaining | 12:26 | |
the ability of the House of Lords to delay legislation, | 12:29 | |
not to reverse the will of the majority | 12:33 | |
as expressed in the House of Commons, but to enable, | 12:35 | |
I wanna put it very nicely, to enable the majority | 12:40 | |
to be sure that that is really what's in its mind | 12:42 | |
by an orderly process of delay. | 12:46 | |
And we're about to have some constitutional | 12:51 | |
confrontations, maybe, in the parliamentary system | 12:54 | |
on the unwritten law and the written law in Britain. | 12:57 | |
So, it is not inconsistent with a longer-run, | 13:01 | |
slower-acting democracy. | 13:05 | |
- | Dr. Burns said that he thought the economy will | 13:10 |
soon speed up once more. | 13:14 | |
How, in your opinion, goes the pause, shall we say? | 13:16 | |
- | Well, let me emphasize that although Dr. Burns is a | 13:19 |
very able economist and a very | 13:25 | |
good man at appraising diverse evidence, | 13:29 | |
his own character has shown something of a risk-taker. | 13:34 | |
I once asked an old-time colleague of his | 13:40 | |
at the national bureau whether this was a surprising | 13:44 | |
feature of Dr. Burns' psychology and this person said, | 13:48 | |
"No, there's a buccaneer inside of Arthur Burns." | 13:53 | |
Well, he has, on a number of occasions, gone out on a limb. | 13:57 | |
I'm a cautious fellow, and therefore I'm able to recognize | 14:05 | |
a chap who goes out on a limb because I'm like that | 14:09 | |
small boy on the block who doesn't dare himself to go out | 14:12 | |
on a limb, maybe secretly admires the one who will do so, | 14:14 | |
and I was very surprised in | 14:18 | |
1954 as we were coming out of that recession, | 14:22 | |
that Arthur Burns took a chance | 14:25 | |
and said that we were going to have a very strong recovery | 14:28 | |
beyond what the evidence seemed to suggest. | 14:31 | |
He won that gamble. | 14:33 | |
He did the same thing in the spring of 1961. | 14:37 | |
April 29th was the date in my little black book. | 14:42 | |
He lost that gamble. | 14:45 | |
He just a year ago took a chance that the velocity | 14:48 | |
of circulation of money would increase enough so that | 14:51 | |
with a rather modest target, | 14:55 | |
we would be able to have the | 15:00 | |
splendid first year real growth sprint that we had. | 15:03 | |
He won that gamble for a while, then he began to lose it. | 15:08 | |
To be candid, I think he's now taking a gamble, | 15:13 | |
and maybe he's well-advised to take a gamble, | 15:18 | |
because what I've noticed is that | 15:20 | |
there is no squad in Heaven or on Earth, | 15:24 | |
which punishes you or punishes you sufficiently | 15:26 | |
for your wrongs as well as your rights. | 15:30 | |
I haven't seen that he's suffered particularly when, | 15:32 | |
on one occasion or another he's been | 15:35 | |
venturesome and has been wrong. | 15:38 | |
So, he will perhaps not be brought before | 15:41 | |
any bar of judgment other than that bar of judgment, | 15:43 | |
which I understand waits us all in the great beyond, | 15:46 | |
all of us economists, I mean, | 15:49 | |
where the final sum squared of our | 15:51 | |
errors will be totaled up. | 15:54 | |
I must say, quoting Thomas Jefferson, "When I consider | 15:57 | |
"there's a just scorekeeper in Heaven, I tremble | 16:01 | |
"for the fate of so many of my colleagues" (laughs). | 16:04 | |
- | How 'bout yourself? | 16:07 |
- | Well, one must walk humbly in the sight | 16:08 |
of the great scorekeeper and I try to do that. | 16:12 | |
But now let's come back very seriously. | 16:15 | |
I've been called by, in just the last couple days, | 16:20 | |
by no less than three correspondents, | 16:23 | |
two economic correspondents for important newspapers abroad, | 16:27 | |
and one the New York correspondent of an important | 16:32 | |
regional newspapers, and I've been astonished | 16:37 | |
at how scared these correspondents are, which is to say | 16:41 | |
how scared of another recession the people that they've | 16:45 | |
been talking to have become, because these correspondents, | 16:50 | |
as you know, are conduits for what's in the air. | 16:53 | |
One of them said to me, he said, "I'm completely confused. | 17:02 | |
"I'm getting absolutely contradictory signals from | 17:07 | |
"economists, from non-economists." | 17:12 | |
He said, "I'm even getting contradictory | 17:16 | |
"signals from monetarists. | 17:18 | |
"I have talked to a monetarist in Virginia | 17:20 | |
"and he said we're in for a recession, | 17:23 | |
"and I talked to another prominent monetarist | 17:26 | |
"1,000 miles, 900 miles from Virginia and he's worrying that | 17:31 | |
"the danger ahead is inflation; how is this possible?" | 17:37 | |
I said, well, it's very easy of course to have contradictory | 17:42 | |
opinions because the picture in fact is clouded. | 17:49 | |
With respect to monetarism, it's quite easy because | 17:53 | |
I also have diverse views from different monetarists | 17:56 | |
and the reason is that there are variable lags. | 18:02 | |
And what you have in the past years' experience, | 18:06 | |
or the past 18 months experience, is you have | 18:11 | |
short epochs in which the money supply grew too fast | 18:14 | |
from the standpoint of monetarists and in which it grew | 18:17 | |
too slow from the standpoint of a monetarist. | 18:20 | |
Now, depending upon whether you increase the lag | 18:22 | |
to nine months rather than six months, or drop it to | 18:25 | |
six months rather than nine months, you're in a position | 18:28 | |
to explain what happens whether what happens is a surprising | 18:32 | |
pick up in the rate of growth of nominal GNP | 18:36 | |
or a surprising slow down in the rate for nominal GNP. | 18:39 | |
And therefore, you may quite honestly think you've been | 18:46 | |
right all along when in fact you haven't said very much. | 18:52 | |
I said, well, let's turn to other bits of evidence. | 18:56 | |
What is said? | 18:59 | |
He said, "Well, I've been talking to the man who, | 19:00 | |
"of all people in the world, | 19:04 | |
"keeps the annals of business cycles, | 19:06 | |
"and he says there's nothing surprising | 19:07 | |
"that in ten months we should have a recession." | 19:09 | |
In ten months the business cycle, | 19:12 | |
the recovery, will begin to be long in the tooth | 19:18 | |
according to the experience of all the business cycles | 19:23 | |
going back to when we started | 19:25 | |
keeping the records, 1840 or so. | 19:27 | |
As you begin to, say, get into a three-year ... | 19:30 | |
third year of recovery, that's like moving into | 19:33 | |
threescore and five or threescore and ten | 19:39 | |
if your tennis game slows down a little at that point. | 19:42 | |
What's so surprising about that? | 19:47 | |
The same reporter said I talked to another chap, | 19:53 | |
we don't want to identify any of these people by name, | 19:58 | |
but I assure you he's one of the most important consensus | 20:04 | |
forecasters, and he said it all depends | 20:07 | |
upon what we learn on December 6th. | 20:09 | |
If when the SEC | 20:11 | |
Department of Commerce survey of | 20:15 | |
fixed plant and equipment expenditures comes out, | 20:17 | |
and those numbers are disappointing, | 20:21 | |
then the ballgame's over. | 20:22 | |
What do you think, professor? | 20:26 | |
Can you give me some kind of balanced view? | 20:28 | |
I said, well, all I am is balanced (laughs). | 20:30 | |
So, yes, I'll give you a balanced view. | 20:34 | |
I said, first, it is important what we learn on December 6. | 20:35 | |
If the optimism of the McGraw Hill survey, | 20:40 | |
which it was optimistic, is confirmed, | 20:43 | |
that will be important. | 20:46 | |
If it is denied, that will suggest that the lull | 20:47 | |
is spreading just as a further deterioration | 20:52 | |
in the consumer's sentiment surveys will suggest that the | 20:57 | |
lull is beginning to undermine the confidence | 21:03 | |
and the exuberance of the recovery itself. | 21:07 | |
But, I said, as I've said on these tapes, | 21:10 | |
I have to go with Gertrude Stein then to a first | 21:15 | |
approximation, a dollar is a dollar is a dollar | 21:17 | |
and if housing is strong, | 21:20 | |
and the plant and equipment expenditures is a little bit | 21:24 | |
weak, there is no special magic | 21:27 | |
in plant and equipment expenditure. | 21:30 | |
Which means that it rules the ballgame. | 21:32 | |
The ballgame is made up of all the players in it. | 21:35 | |
The complicated summation of all of them. | 21:39 | |
My own opinion is that | 21:43 | |
it is not, as has been the case | 21:48 | |
in some fateful epochs in our history, | 21:51 | |
it is not too late even if the lull is worse | 21:56 | |
than we now know it to be. | 21:58 | |
I go along with Henry Kaufman, who I heard at the Boston | 22:02 | |
Economics Club; he just pointed out that the, | 22:05 | |
if I can coin a phrase to describe what he said, | 22:08 | |
that the quality of credit is not strained, | 22:11 | |
that you do not have the tremendous overhang | 22:15 | |
of REITS in the real estate field. | 22:20 | |
You don't have the accumulative excesses | 22:24 | |
of a long recovery period, you do not have | 22:27 | |
long backlogs, inventory excesses. | 22:32 | |
The result is that it would be surprising | 22:35 | |
if we went into an avalanche downward. | 22:37 | |
I must qualify this in only one respect, | 22:40 | |
there are a lot of soft loans out to nations | 22:45 | |
in the third world, | 22:50 | |
many of these not made by the world bank, | 22:53 | |
not made by the IMF, not made by the U.S. Government, | 22:57 | |
not made by OPEC Governments, but made by your friendly | 23:01 | |
Chase Bank, your friendly Citicorp, | 23:07 | |
your friendly Morgan Bank, and those numbers | 23:11 | |
have even just become a matter of public record | 23:16 | |
for the first time, published whose on the trouble list | 23:20 | |
and how much the different countries are in to them for. | 23:23 | |
Now, the total of those debts, which I cannot regard | 23:27 | |
as the hardest of debts, is in the tens and tens | 23:31 | |
of billions of dollars. | 23:35 | |
And so you could have some quality of credit problems | 23:37 | |
in that particular area. | 23:42 | |
Its famous last words that everything looked alright to me | 23:44 | |
at the time just as the rug of faith was about to be | 23:47 | |
pulled out from under some economist forecaster. | 23:50 | |
So, like Wesley Mitchell in 1929 when he told | 23:53 | |
Herbert Hoover that the economy looked great, | 23:58 | |
the soft sweet talk that I'm giving you | 24:01 | |
could turn out to be completely wrong. | 24:05 | |
But we have to go by the pattern of evidence | 24:07 | |
and I would say that if the lull is | 24:10 | |
more serious, is as serious as it is abroad, | 24:15 | |
this will show itself in our moving increasingly into | 24:20 | |
a growth recession, but the new president can change that. | 24:22 | |
And I think the fact that Carter was elected president | 24:29 | |
makes it less likely that we will move into a recession. | 24:33 | |
Maybe as these appropriations I was talking about earlier. | 24:36 | |
- | Oh, yes. | 24:39 |
- | Yeah. | |
He has the will to do something and I think he probably | 24:41 | |
has the ability to do something. | 24:45 | |
Wall Street, you know, loves to scare itself. | 24:48 | |
I noticed with my six children | 24:51 | |
that they love the most gory of Grimm fairy tales | 24:55 | |
and I once asked my daughter, Jane, why she liked | 24:59 | |
one particular one, she said, "It's so scary." | 25:02 | |
Well, that's how you can pull down $3,000 fees | 25:04 | |
talking to Wall Street audiences; they love to be scared | 25:09 | |
provided its a credible story. | 25:13 | |
Now, I've always claimed you can't have it both ways, | 25:16 | |
you can't worry about Carter, | 25:19 | |
the man who is going to create so much spending | 25:21 | |
that you're gonna have inflation, and Carter, | 25:26 | |
the man who's gonna provide over a depression | 25:30 | |
as big as any we've had since the 1930's. | 25:34 | |
You oughta ration yourself in all matters, | 25:39 | |
moderation is the formula, and you oughta ration yourself | 25:41 | |
on worries, and in particular you ought to treat worries | 25:44 | |
as algebraic, some of them cancel out each other. | 25:47 | |
It's a case of not one plus minus one equaling plus two | 25:51 | |
of worry but plus one plus minus one equals zero of worry. | 25:57 | |
And therefore I think that the Carter election makes it, | 26:03 | |
I'll be candid, makes it more rational to worry | 26:11 | |
about where the price level will be in 1980 | 26:14 | |
than if Ford had been elected. | 26:17 | |
But it doesn't make it more rational to worry that we shall, | 26:19 | |
in 1977 itself, be moving into a serious recession | 26:25 | |
that any owner of common stocks ought to be taking | 26:33 | |
into account in the bidding he now does | 26:37 | |
in the day-to-day movements of the Wall Street averages. | 26:40 | |
- | We have time for one quick question here, | 26:45 |
what sort of appointments would you like to see | 26:49 | |
Mr. Carter make in the economic area? | 26:52 | |
I know it's almost become somewhat of a tradition | 26:55 | |
for Democratic presidents to appoint a Republican | 26:58 | |
or a Conservative to the treasury. | 27:03 | |
Do you see some rationale for this? | 27:05 | |
- | Well, there was a greater rationale | 27:10 |
to pick a Republican for the Secretary of Treasury | 27:15 | |
in 1960-1961 when Douglas Dillon was picked | 27:20 | |
by President Kennedy and his team. | 27:26 | |
For the reason that we were then on a fixed parody standard. | 27:32 | |
The dollar was already, in my view, overvalued | 27:38 | |
and it certainly was believed to be overvalued by | 27:41 | |
a lot of gnomes in Zurich and therefore, | 27:45 | |
Kennedy would never have been tempted, I believe, | 27:50 | |
to have picked John Kenneth Galbraith as | 27:52 | |
the Secretary of Treasury. | 27:54 | |
But if he'd picked him, that would certainly have cost | 27:56 | |
hundreds of billions of dollars worth of gold | 28:01 | |
under the convertible gold standard, | 28:03 | |
and might well have toppled the dollar. | 28:05 | |
Candidly, it would've been better if the dollar | 28:08 | |
had been toppled then, but that's not the way the | 28:10 | |
powers that be think of things. | 28:15 | |
With foreign exchange rates, we no longer | 28:17 | |
are subject to the blackmail of foreign exchange | 28:20 | |
and so I think that Carter | 28:25 | |
and any of the Democratic Secretaries of Treasury | 28:31 | |
whom he would be tempted to pick, | 28:34 | |
it seems to me the system could stand. | 28:37 | |
Now, just to be concrete, take Walter Heller as an example. | 28:40 | |
Walter Heller, it seems to me, is not the sort of person | 28:47 | |
who could not be appointed, I have no reason to think that | 28:52 | |
Heller will be appointed, the candidate has been very | 28:55 | |
circumspect in these matters. | 28:59 | |
I'd say it's a question of the merits of the man. | 29:04 | |
- | Thank you very much, Dr. Samuelson. | 29:10 |
If you subscribers would like to ask questions of | 29:13 | |
Professor Paul Samuelson or suggest subjects | 29:17 | |
for him to discuss, please write to | 29:19 | |
Instructional Dynamics Incorporated, | 29:22 | |
450 East Ohio Street, Chicago, Illinois, 60611. | 29:25 |
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