Hotson and Wilmeth, 1982

The Future of Monetary Policy: 1982 Hearings of the Joint Economic Committee, a Google Book

From the statement by Harvey D. Wilmeth of Northwestern Mutual Life Insurance Co., Milwaukee, Wisconsin; page 196:

A money and credit system does not manage itself. Either the Government or the invisible hand of market forces will provide the ultimate unavoidable discipline. We have chosen to let market forces provide the bulk of that discipline, but we don't like the consequences. Inflation, stagnation, and depression are all a part of that discipline. This is an extraordinarily inefficient way to manage the financial structure of a modern economy.

I have tried to say something like that:

Jobs? You think jobs is the problem?? Okay. But it's our problem. A problem for people. It's not a problem for the economy. If you want jobs from the economy, you have to give the economy what *it* wants.

And:

I sometimes say "the economy wants" this or "the economy wants" that. The economy has its own rules which we did not invent and -- if we want the economy to do what we want -- we must respect those rules.

I sometimes say "the economy does not care" about inflation or unemployment. Those are not problems for the economy. They are problems for people. For the economy, they are simply ways to correct imbalances.

And again:

Here's how it works: A man lives for a while, and then dies. A nation lives for a while, and then dies. A civilization lives for a while, and then dies.

If you want your civilization to live, not die on your watch, then economics must be nothing more or less than the effort to get the right answer.

The right answer does not depend on what you or I want. It depends on what the economy wants and how the economy works. Our task is to understand these.

I don't know. Maybe Wilmeth says it better. But for me, finding economists who say what I say validates what I do.

Again, this is from the 1982 hearings. From the statement by John H. Hotson, professor of economics at Waterloo University, Waterloo, Ontario; page 215:

The administration thinks the problem is inflation and that high interest rates are the solution. But as Mr. Wilmeth has been saying, overindebtedness and imbalances in the economy are really the basic problem and high interest rates only make these basic problems worse. It's the overindebtedness of the private sector I'm talking about rather than the public sector.

Under the heading "The Rapid Growth of Interest Payments", Hotson adds:

Since World War II, the private sector has increased its indebtedness four times as fast as real GNP has increased; it's increased its indebtedness twice as fast as the nominal GNP has increased; it's increased its interest payments twenty-six times as fast as real GNP has increased; and it's increased its interest payments 6 times as fast as even nominal GNP has increased. 

It's this rapid run-up of interest payments and new borrowings, where both have increased as a percentage of GNP, which has made the financial system of the economy -- and not just of this country -- so fragile.

It's simple: cost is a problem. 

And please do notice that Hotson's concern is interest payments, not interest rates. Interest payments depend on interest rates and on the accumulation of debt on which interest must be paid.

My concern, like Hotson's, is the cost problem, the cost of finance.

For more on Harvey Wilmeth see The Wilmeth Brothers after Purdue.

John Hotson has apparently been expunged from the Waterloo University site.