Interest Rate Hikes

* Remember the “soft landing”? That was Federal Reserve Board Chairman Alan Greenspan’s attempt in 1990 to “cool off” an “overheated” economy, lest America be consumed by inflation. The Fed maintained a tight-money policy amid growing demand for capital. The economy landed softly, all right--right into quicksand. It began sinking by the summer of 1990, then plunged like an anvil once Congress approved George Bush’s “read my lips” tax increase. Thanks to Greenspan and Bush, the 1990 recession and the, until recently, imperceptible “recovery” were under way.

Now Greenspan is poised for an encore. After President Clinton’s $241 billion tax hike, designed to reduce the deficit and lower interest rates, the Fed has seen the last two quarters of welcome economic growth and fled for the comfort of higher interest rates.

In order to combat an imaginary inflation problem (the 1994 Consumer Price Index is up a whopping 1.9%), the Fed seems prepared to shred today’s healthy expansion. With taxes and regulation on the rise, higher-priced capital will remove the one factor keeping the economy afloat.

If Greenspan has any empathy for the millions of Americans who are being hired, buying new homes and paying their bills on time for a change, he will stop running from the make-believe inflationary bogyman and instead allow this mantra to guide his economic actions: Let it grow.

DEROY MURDOCK

Culver City

* Greenspan’s recent actions are like those of the cross-eyed duck hunter: He accidentally shot the dog.

RICHARD M. LEMON

Anaheim