The Waterbury Democrat., 1942-04-16

4He 1OlOWlnB QuSbblOn @nu answer series was issued today by the New England Regional Office of the OPA, 1T Court street, Boston.
 c. What Is inflatonp
 A. Initiation is a sharp, large ia- crease in money and credit avail" able for spending without a prcpor- donate rise in supplies of goods available for purchase. This re- suits in higher prices.
 c. DO we face e danger of inc faltlon today?
 A. Yes. Tn fact, we are in the early stages of Q serious infiation- ary spiral.
 c. What causes this danger?
 A. American labor, management and capital are being paid more money this year than ever before. At the same time, the production of consumer goods Is being drasts ically cut. If this unbalance cone tinues, even after taxes are paid and savings deducted, there will be only @ worth of goods for very S4 that people have to spend. That extra dollar vii lbe thrown on the mar. ket as bidding power for scarce goods, forcing prices upward.
 e. If Americans have 94 to spend for every @ in goods, won't prices stop when they have gone Up SS per cent2
 A. No. Consider c man with $40 to spend for 930 worth of goods. If he sees an article he wants very much, even though it was priced at 10 cents in l941, he may be willing to bid all of his surplus for the article. When plates of ham and eggs sold for e2O In gold rush days it wasn't because there was 920 in gold for every fifty cents worth of goods. It was simply that there were more miners who wanted ham and eggs than there were plates of ham and eggs each day. and 50 some were willing to pay exorbitant prices for the privilege of eating this scarce food.
 Q. Is imitation caused only by the disproportlon between the amount of money people have to spend and the normal" value Of consumer goods available7
 A. No. There are other reasons. Higher prices seem to make even higher prices. The gold rush res- taurant owner who could get S20 for 0 plate of ham and eggs would be willing to spend $500 for c fur coat worth 97b in some other town. Also in time of war even the best- informed people are subject to fears and alarms, which produce price rises. Take recent example -- false rufnors of 6 soap shortage caused people to buy more soap than they need, making some prices go up. even though we have Q sur plus of soap.
 c. Have there been any danger signs of infaltion?
 A. Yes, the cost of living in January, i042, was i3 per cent higher than in September, 1889, ct the outbreak Of the war.
 e. What has been done to check imitation?
 A. Higher taxes, sales of Defense Bonds, and c certain amount Of price fixing have put c small brake on imitation. Money that the govs ernment takes ita taxes or receives in return for bonds cane be used by consumers to bid up prices. And you1l notice that even the smallest bonds are now registered 50 they can't be used aS money, in the way Liberty Bonds were used after the last war. Also, your government has fixed the prices on more than 100 commodities and groups of products. They will not skyrocket in price but thousands of other goods and services are not under control.
 e. If stronger brakes are not aps piled, what will happe1T
 A, Based on past experience, prices 90 up first, followed gone- what later by wages. If it remains out of control, imitation results in huge rises In costs coupled later with 6 &harp increase in war labor wages. Unable to assess values h such c HnercurlaI market, businegs finds it difficult to plan ahead and Congress has no accurate guide for enacting 6 sound tax program. Jn- evitahiy, goods are ioarded against rising priceg, and men and mate rials arc drawn to the most irfiat- cd industries - industries that may be relatively unimportant in war production.
 q. Isn't 1t possible to solve the problem by printing more Tioney7 A. Some gOvernnlertg have tried t. They have deliberately lowered the value og their currency in aii effort to CounteTbalaface rising prices. But printing more money hes started price rises ell over again. The faster prices went up, the fagter the government had to print money, and tho faster they printed more the faster prices wont Up. Tn the end there vas natlcnal bankruptcy.
 e. Who would profit from saCon- trciled infsation7
 A, Tn the. early stages, these who owe money and those who have iaid away stores of goods. A man who owes 1iO0 today may figure that he owes ten days work Similarly, az prices rose, the man who hid away 6 warehouge gSiii Of eA hams would find he had, possbiy, 6 warehouse l fu1i Of ee hams.
 nst M AAs amA thAae sapagaelai