The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“IF YOU HAVE A JOB, YOU AREN'T CAUSING INFLATION--GUESS WHO IS?” mentioning the Federal Reserve System was published in the Extensions of Remarks section on pages E888 on May 1, 1995.
The publication is reproduced in full below:
IF YOU HAVE A JOB, YOU AREN'T CAUSING INFLATION--GUESS WHO IS?
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HON. PHILIP M. CRANE
of illinois
in the house of representatives
Monday, May 1, 1995
Mr. CRANE. Mr. Speaker, the Orlando Sentinel recently featured an article which destroys numerous myths pertaining to inflation.
Mr. Charley Reese, author of the article, highlights congressional responsibility for inflation. He goes on to argue that economic progress has been hampered by inflation stemming from actions of the Federal Government and Federal Reserve System.
I commend to the attention of my colleagues ``If you have a job, you aren't causing inflation--guess who is?''If You Have a Job, You Aren't Causing Inflation--Guess Who Is?
(By Charley Reese)
There's a big con game going on. The con is that politicians in both parties and the bankers talk about problems caused by inflation without mentioning that they cause it.
To hear the central bank talk about it, you would think inflation is caused by people getting jobs. Uh, oh, the central bankers are saying, too many Americans have jobs, and so we had better increase the rates of usury to keep inflation under control.
In a country with so many millions of people unemployed and underemployed, it is impossible for people to cause inflation by getting a job. Even if we had 100 percent employment, people getting jobs would cause little if any inflation.
There are, to keep it simple, two kinds of inflation. One is called cost-push inflation and the other is monetary inflation. Politicians and money-lenders would like you to believe that cost-push inflation is the only kind that exists.
Not so. An example of cost-push would be a situation in which there were a great drought in the Midwest followed by a plague of locusts, so that the grain crop would be severely reduced. Because there would be insufficient grain to meet the demand, people would bid up the price in an effort to get what was available. That's cost-push: a rise in prices produced by an increased demand for a commodity or product.
Monetary inflation, however, is when the monetary authorities put so much money into the system that the value of each unit declines. Demand and working people have nothing to do with it. That type of
inflation is entirely in the hands of the government and the central bank.
That's really what Mexico's peso crisis is all about. As it always does, the Mexican ruling party turned on the printing presses and greatly boosted the money supply during the election campaign. When this happens, eventually the monetary unit will decline in value.
As the value of the monetary unit declines, people are forced to raise prices just to maintain their same level of income. Because of continued deficits and the profligate policies of the Federal Reserve, the U.S. dollar has lost its value.
Money is not wealth. What one buys with money is wealth--houses, clothes, tools, services, etc. How much a given unit of money can buy is called purchasing power. Well, the purchasing power of the U.S. dollar, thanks entirely to Congress and the Federal Reserve, has declined so much that, if you made $10,000 in 1967, you would have to make $40,000 in 1995 just to be where you were 28 years ago. To put it another way, it takes $4 today to buy what $1 would buy in 1967.
But the key point to understand is that this is the fault of Congress, not the fault of the private sector. Back in the 1960s, Congress gave up any effort to maintain a stable money system and indexed--those famous cost-of-living allowances--most federal programs. It did that to take the sting out of inflation, a policy it was consciously pursuing, because it is more politically palatable than bringing the federal budget into balance and reining in the central bank.
But, of course, if you aren't on the federal teat, your income didn't get indexed to inflation. Inflation never affects people uniformly. Some can prosper; some can stay even; and some will fall behind.
What outrages me is to hear bankers and politicians talk about the real misery their inflationary policies have caused while pretending that it is not their fault but someone else's, either greedy consumers spending too much or some unexplained, uncontrollable mysterious ``thing.''
It's they. It's the 100 senators and the 435 members of the House. It's the Federal Reserve System, which Congress created and which Congress could, if it had the sense and the guts, seriously reform or abolish. They caused the economic misery. Now they are blaming the victims.
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