American Power: Economic and Political Realities

Abstract

Three different schools of thought have been crowding round the President of the United States. All of them quote wrong figures to the President, who is not always in a position to know what is right or wrong. The first and probably most important group is the financial interests of Wall Street, who have decided that the persistence of budget deficits in 1982 through 1984 means that more inflation lies ahead. The facts, however, indicate the opposite. Over the past three years, American inflation has tumbled faster than in any other Western democracy and is now among the lowest in the Western world. The underlying rate is about 3.2 per cent and the budget deficit is going to be above the original estimate in these next three years mainly because there is not going to be as much inflationary over-demand as the Reagan Administration first supposed.

The Economist. Address given to the RUSI on 23 June 1982