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THURSDAY JANUARY 4,1979

The Herald

INFLATION INVESTING

provided by Alfred F. Bracher, Jr. and Thomson McKinnon Securities, Inc. Member of the New York Stock Exchange

Every now and then an inflation status report is issued by our Federal government that lets even the casual observer of our economy know exactly where his buying power stands - or falls. Such an event took place in late November when our senses were assailed by the staggering information that “everything" now costs twice as much as it did ten years ago give or take a few percentage

points. Some of the specific sobering statistics included food up 116% in the past ten years, housing up 109 %, fuel plus 120%, and medical care up nearly 90%. These kinds of numbers give real shape and substance to inflations formidable onslaught. They telegraph a far more dramatic message than simple news about the annual rate statistics which many Americans

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probably feel they can adjust to through cost-of-living wage in reases or household budget shifts and cutbacks. What the ten year inflation numbers highlight is that if your annual income didn't double in the decade - and most American's didn't - you're a net loser in the inflation sweepstakes. If your set aside capital (savings) didn't appreciate 100% your penny-saved, penny-earned thrift need significant revisions (with apologies to Ben Franklin.) The ten-year overview proves conclusively that creeping inflation walks sooner and faster than almost anyone ever expects. It demonstrates with frightening precision that the more inflation grows, the faster it moves. It should remind all of us that short-term, short cut “solutions" not only don’t work, they ultimately feed the

whold inflation process.

Us folks at INFLATION INVESING headquarters are mighty impressed with some of the recent steps President Carter has initiated to combat this

mortal foe of our economy.

The naming of an outspoken inflation-hating impressario in the form of Alfred Kahn, the setting of “hard" price and wage guidelines, the philosophic determination to confront inflation head-on on its own turf are laudable moves, one and all. They deserve the whole hearted and unhedged support from every last one of its citizens, no

questions asked.

Against the slight possibility that there might still be an uninformed mortal or two who does not yet grasp the seriousness of the inflation problem, or an undaunted soul who has casually dismissed it as another major non-event, we'd like, to mention a work or two about the progress of Mr. Inflation in a couple of other

spots on the globe.

The great and sovereign state of Argentina is a case in point. Though this nation has long suffered from sky-rocketing inflation rates, its current dilemma exceeds even its own precendent-setting history. During October, for example, the Argentina consumer price index advanced 9.8%. Since January 1 the cost of living has jumped 127%. True enough, this South American nation differs markedly from the from the United States, so exact parallels cannot be drawn. But there are sqmc uncomfortable close similarities - factors that should be sobering reminders that it might happen here. The Argentine government has a large budget deficit, one that is difficult to control (sound familiar?). There is a great deal of wasteful state spending! And interest rates on corporate and state borrowings have been soaring - would you believe 20%

annual rates?

Just in case some one reacted to these startling Argentine inflation developments with a cynical “so what!” let us buttress our case with another Just in case some one reacted to these startling Argentine inflation developments with a cynical “so what!" let us buttress our case with another illustration, this one up north. The citizens of Iceland all 222,000 of them - are currently wrestling with an annual inflation rate of 40 to 50%. Though they, too, are accustomed to higher inflation rates than in the U.S., what's

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been happening in that little country this year has been changing everyone’s outlook about everything. Consumers buy less. They, along with businesses, borrow to make short-term ends meet - at rates up to 33%. Because of the borrowings they have a vested interest in inflation (sound strange?) because they want to pay off their debts with cheaper dollars, but this feeds the very condition that got them into their inflation jam in the first

place.

No matter how accustomed the Icelanders are to inflation they are still surprised anew each time they go to fill their market baskets. Allright. Iceland's and Argentina's problems are a far cry from our own. So far. Perhaps forever: But we can remember vividly when we all c ontendedly accepted inflation rates of two or three % in this country and were not the least concerned that they would ever escalate to today's double digit

levels.

As an old mentor of ours used to say, “Like every other tax, inflation, once commenced, is the devil to stop. Each inflationary act forces the advent of another. Inflation discourages all thrift and prudence. It encourages squandering, gambling, reckless waste of all kinds. It tears apart the whold fabric of stable economic relationships. It ends invariably in bitter disillusionment and collapse." The citizens of Artentina and Iceland are probably already convinced of this. It should be high on the agenda of all U.S. citizens. Graduates of the Week The following have been designated “Graduate of the Week” for the month of January, 1979: Jan. 1 - Mr. Vincent McCormick, graduated in 1978 from the Adult Beauty Culture class, He is currently employed at Leo’s Mane, Avalon. Jan. 8 - Mr. Chris Meder, graduated in 1978 from Building Trades and is currently employed at Hare Brother Construction, Avalon. Jan. 15 - Mrs. Joan Ruoff, graduated in 1975 from the Office Occupations class. She is currently employed by the Middle Township Board of Education as a secretary to the Assistant Superintendent. Jan. 22 - Mr. Kenneth Schellinger, graduated in 1977 from the Plumbing & Heating shop. He is currently employed by Steve Patrick Plumbing & Heating as a plumber. Jan. 29 - Mr. Thomas B. Park, graduated in 1978 from the Drafting class and the On the Job Training program. He is currently employed at Van-Note Harvey Associates.