That characterizes how Wayne D. Angell, a member of the board of governors of the Federal Reserve System, looks at the American economy.Taking all of the economic factors into consideration, Angell believes the economy will show growth and he isn't concerned about the present U.S. trade imbalance. "We shouldn't do anything foolish like establish tariffs," he said Thursday during a luncheon meeting in the Little America Hotel sponsored by the Federal Reserve Bank of San Francisco.
If the Federal Reserve System continues with a good monetary policy the country will continue to grow and inflation will be low, but the reverse is true if the monetary policy is bad. Angell said he is a little embarrassed over the thought that many foreign investors are helping United States companies rather than the companies being helped from within.
A good monetary policy means zero inflation in the manufacturing-related area and the country must stay away from protectionist laws or any attempt to raise the minimum wage, Angell said. Raising the minimum wage will only prevent disadvantaged people from getting jobs because employers cannot afford the higher wages, he said.
Being unable to get jobs if the minimum wage is raised, the disadvantaged will go on welfare and that will be a burden on government, he said.
Angell, who was appointed to the board by President Reagan Feb. 7, 1986, for a term to expire Jan. 31, 1996, said the 1960s and 1970s were the longest period of accelerated inflation in the country's history. He said the Federal Reserve Board was aware of what was going on and it wasn't until 1979 the board changed its monetary policy.
In October 1979, the U.S. dollar was in ill repute and there was double digit inflation so the Federal Reserve, no matter how the political winds were blowing, decided to change the monetary policy, Angell said. In 1981-82 the Federal Reserve Board clamped down on the money supply and a recession was the result.
And in 1986 the money supply was increased to give a boost to deflation and the higher price of copper at other metals helped boost the economy. Along with orders to replace depleted inventories, the economy showed some growth although it wasn't has high as in the past, Angell said.