The Federal Government's Weapons to Fight Inflation and Economic Instability

The federal government has never explicitly de clared that prevention of inflation is its responsibility, and only recently has a strong opinion arisen that such a declaration should be made, possibly by amendment of the Employment Act of 1946. Some of those who desire price stability believe that, to achieve it, the federal government should add control over installment purchases and over major wage contracts to its repertoire. They feel that fiscal policy, depending upon Congress, is untrustworthy and that a tight monetary policy does not quickly reach important sectors of the economy. Op position to federal assumption of responsibility for price sta bility comes especially from those who fear that its implemen tation will slow up economic growth. In their view, the "cost- push" is chiefly responsible for our recent inflation and for the prospect that creeping inflation lies ahead. It should be ac cepted as a fact of economic life, with some effort to miti gate its inequities through widespread extension of escalation. Such a step is, however, to be opposed both on grounds of equity and of theory. Widespread escalation is not feasible, and creeping inflation, if accepted as policy, will create eco nomic disorder rather than accelerated growth.