Excerpts from Reality Inspector 3

Copyright © 1982 John Caris

ZAC was having a reality problem, and its problem was affecting the economy of the United States. For the past several years inflation had been soaring at an incredible rate. Everyone had an opinion about the causes and solution. Not only were the economists and politicians arguing heatedly, but so were the people. Each had a pet theory that would surely work miracles, if only given a chance.

The Federal Reserve Bank had always maintained a ranking of the money that was in the U.S. economy. M-l was the category for money in circulation, that is, cash and money in checking accounts. That money was readily available. The Federal Reserve had established a fiscal policy that when M-l increased money would be drained from the economy by raising the interest rate. The government hoped that such a procedure would tighten up the money supply and so curb inflation.

Back       Next