He’ll have a hard time keeping his promises on this front, as anyone would, because of the dynamics involved.
by Paul Anton
Star Tribune
“If everyone in town just pulls together, can we keep inflation out of our town?”
That is the question I was asked on a phone call to my office at the Federal Reserve Bank of Minneapolis one morning in 1979. I was a young economist in the bank’s research department. The caller was a representative of a special civic committee from a medium-sized city in the Ninth Federal Reserve District. The committee’s goal was to keep inflation out of their town, if possible.
The caller was so sincere that I felt he deserved more than a glib answer. So, I explained step by step. The committee would have to convince the Ford dealership not to raise its prices when the wholesale prices it paid Ford for cars rose and, eventually, to sell cars at a loss. The same held true for the local appliance store and other local merchants.