Miller's Formula Against Inflation: New Chairman of Fed Has Anti-Inflation Formula
i The following article, bij President Carter's nominee as chairman of the Federal Reserve Hoard, is reprinted from the Oct. 5. 197-1, issue of business Week magazine, by special permission.! liy G. 'William Miller</br></br>The present long-term inflation spiral is the result of trying to fulfill legitimate worldwide needs and wants by means of credit and deficits rather than by savings, investment, and productivity.</br></br>As a consequence, demand lias outrun the capacity to supply. Shortages have bred cartel nationalism with dramatic redistribution of capital. Financial mechanisms, domestic and intcrnatonal, have been strained nearly to the limit.</br></br>The problem of arresting inflation is today mor* political and social than economic. The task is to find an economic solution that is politically acceptable because it accommodates societyÛªs value goals.</br></br>Working our way out of inflation requires an allocation of the available hut limited resources to areas of priority, thus reestablishing a proper balance between supply and demand. Allocation solrlv by controlling the aggregatesÛÓthe supply of money and not federal spendingÛÓwill bring about levels of unemployment ami general economic hardship that arc likely to be unacceptable. Allocation by direct controls involves even more difficulties.