(10 of 10)
Prices will continue to rise less and less controllably as long as businessmen, union leaders and consumers take it for granted that they can always count on the Government to intervene to prop up jobs, incomes and profit. Reflation now, they say, might produce a momentary upturn, but it would only lead to another round of price rises, another consumer panic, another slowdown in business investment—and a more devastating bust. They worry that the U.S.
cannot follow that cycle long without reaching the sad state of the British economy. Inflation is so ingrained in Britain by now that any attempt by the government to stimulate economic activity results not in a rise in real output but only in higher prices.
Ford and his advisers recognize, however, that they have a brutal problem: if the recession continues longer than now expected, they must choose the point at which the terrible costs of a continued downward spiral outweigh the benefits of tempering inflation and dictate some new stimulation (probably tax relief rather than more spending). But that point, in their view, has not come yet, and for a while longer, recession will continue to alter the lives and outlooks of millions of Americans.
* The term has no precise definition but can generally be taken to mean a substantial decline in business activity accompanied by a significant rise in unemployment and lasting several months.