Federal Reserve

* Could someone please explain what I’m missing? Post World War II was a period of explosive growth. The war years had left the population with a massive hunger for housing and for consumer goods. The housing demand was met, largely, by government backed loans (VA 4%, no money down). Industry rose to the challenge and converted factories to the manufacture of peacetime goods. Finally, we could buy a car, a refrigerator, nylons!

Yet, there was minimal inflation. The house we purchased in 1956 for $15,400 (and to which we had added a large room) was sold in 1970 for $22,000. Our new, much larger home cost us $35,500 and had a conventional mortgage rate of 8%. We could buy a home at a rate that represented one week’s net pay for the monthly payment. That left us with funds for the purchase of other goods and services.

Today we have a government agency, the Federal Reserve Board, that sees nearly full employment as a danger and raises interest rates to dampen down the “overheated” economy at the same time that politicians woo us with promises of tax cuts which will, if they materialize, provide us with far less money than the rise in interest rates has cost us.

So I ask again. What am I missing? Can someone please explain?

PATRICIA A. FYLER

Brea