Date: 1983-03-09
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. the high interest rate gang of eight Is at it again. For 10 years. the Shadow Open Market Committee has sallied forth to warn that interest rates and unemployment were too low. while economic growth was too high. And for the last 3 years. whenever the Shadow Committee speaks. the Federal Reserve listens. The Shadows guiding light is the dim ray of monetarism. and its most fervent hope is for permanent recession and zero inflation. On Monday. the Shadow demanded that "the Federal Reserve must slow money growth now." even though the Wall Street Journal reports that "several committee members acknowledged that their proposals probably would mean a retardation of U.S. economic growth." Yesterday. Chairman Volcker told the House Budget Committee that the growth in money supply will have to be slowed. The reaction on Wall Street was immediate: Interest rates shot up. bond prices dropped. and the stock market plummeted from the record heights. Whenever the United States is in danger of a strong recovery. dire warnings spew forth from the Shadow Open Market Committee about renewed Inflation. Even now. at a time of rock bottom commodity prices. falling oil prices and continued wage givebacks by unions. the Shadow sees Inflation on every horizon. and Chairman Volcker Is grappling for a look through the committees bleakcolored glasses. The Shadow Committee played a major role in badgering the Federal Reserve Board toward adopting high interest rate monetarism in October 1979. For the next 3 yearsthrough mid1982---our Nation suffered through no economic growth. record unemployment levels. droves of businesses failures and interest rates that selfrespecting usurers would not discuss in 1978. Since the Federal Reserve abandoned monetarism last fall. Interest rates have come down and are still falling. the economy is picking up steam faster than any economist dared predict a few months ago. and our housing and auto industries are emerging from the shadows of depression. Does the Shadow Open Market Committee welcome these rays of hope? No. it demands that the Fed stomp out the recovery while theres still time. The Shadow Open Market Committee does not view the last 3 years as an unmitigated disaster. costing millions of Jobs. thousands of businesses. and many lives. Instead. it speaks of the "gains achieved at the cost of two recent recessions and prolonged stagnation from 1979 through 1982." and it worries that "rapid monetary growth threatens to squander the gains." The Shadow Open Market Committee characterizes the years of monetarist living as "prolonged stagnation." Does the committee believe that this is just a coincidence? Well. the 25 million Americans who were unemployed at some time last year can join us in Congress to tell the committee that it is not a coincidenceit is a consequence of monetarism. Over the past decade. the Shadow Committee has become like a Chorus of Shades in Greek drama. Whenever good economic times settle upon us. this modern Chorus of Shades enters stage right to repeat endlessly the only refrain It knows: "Slow money growthhigh interest ratesslow money growthhigh interest rates." This one phrase has earned the Shades respect on Wall Street. tenure at their universities. and the rapt attention of some at the Federal Reserve Board. The Shades know that flintyeyed warnings of doom always find an audience. and calls for belttightening always command a respectful hearing. no matter how awful the last recession has been. Today. we have news for the Committee of Shades and for Chairman Volcker. This Congress will not tolerate a return to flintyeyed monetarism. high interest rates. and recession. Our citizens have suffered under 3 years of miscreant monetarism. and the time to stay with recovery is upon us. The Committee of Shades must now learn a second lesson. Too much recession is a bad thing. Its preferred policies have brought this Nation and the world economy to the brink of bankruptcy. Monetarism has lashed our Nation to a mountain of debt. and while Americans are willing to suffer equal sacrifice for the common good. we know that fast growth. increased Investment. and high employment are the only answers to inflation. poverty. and international debt overloads. The United States is rising once more. struggling to Its feet after casting off the bonds of high interest rates. and as the Shadow Committee should know. Prometheus unbound Is bad news for Shades.e