"We should have gone off the gold standard long ago. We were at last driven off by the growing sentiment for inflation," said S. E. Harris '20, lecturer in economics to a CRIMSON reporter on Saturday evening.
"For the last four years we have been unable to stop the decline in prices. It is probable that the inflation bill now before Congress will at least stop the fall of the price level and that in itself will be a great accomplishment. Inflation means that prices will rise and then business will improve because prices always advance faster than the costs of production. There are two ways in which prices may be raised. Either production must be cut or credits must be increased. Inflation is preferable to a curtailment of production because the latter method would lower the standard of living. Thus the inflation bill deals with the situation better than the Black bill establishing a 30-hour week.
Possible To Control Level
"We are taking a chance with inflation, but we need not worry until it begins to appear that the prices are back to the 1929 level. There is every hope that inflation may be controlled because a large measure of inflation would probably do much more harm than good. The danger is that the price level is not determined by the total amount of money alone, but rather by the activity of that money. Therefore, there are no rules of thumb by which prices may be raised 25 per cent. An equal increase of money may bring about an increase of prices of 100 per cent, or none at all. Quick action is necessary. Therefore, it seems wise to give controlling powers to the president and the Federal Reserve Board. Within broad limits it can be controlled. There is no danger that a situation will arise comparable to that which confronted Germany after the war.
The danger in this present bill is that it will form a precedent. This is such an easy remedy that it may be used too frequently instead of methods that will cure fundamental economic diseases. Inflation, of course, cannot purge the economic system of inefficient industries, overproduction in certain fields, and similar faults existing prior to 1929.