Jim Reber is President and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. He can be reached at jreber@icbasecurities.com. Contact us today to place your announcement ad Call 801-676-9722 Or scan the qr code to fill out the form. Who to congratulate , who to acknowledge , and who to thank for a job well done. Employees are motivated when they are recognized and feel valued. The Show-Me Banker magazine is a great platform to celebrate your team's accomplishments! Although the embargo only lasted for six months, the price of a barrel of crude oil quadrupled, and annual inflation rates hit over 11% by December 1974. Gross domestic product (GDP), as we’ve been reminded, is reported in “real” terms (i.e., net of inflation), so it too was caught up in this vortex. That period is now referred to by economists as the 1973-1975 Recession and was our first dose of “stagflation,” in which persistently high prices accompanied moribund economic activity. All Aboard President Ford’s advisors hatched a plan to drum up grassroots support for inflation-fighting ideas, and Congress established a conference on ways to address it at the consumer level. From that came the “Whip Inflation Now” (WIN) initiative, the much-derided campaign for reclaiming price stability. The administration even produced a collection of pins, buttons, t-shirts and earrings for those engaged citizens who were willing to take their inflation-fighting commitments to the streets. The chairman of the Council of Economic Advisors at the time was none other than Alan Greenspan, who, in his memoirs, called the campaign “unbelievably stupid.” It’s highly unlikely the aggregate activity by those festooned in WIN apparel amounted to a constriction of demand that moved the needle one iota. Still, between the Fed’s pressure on interest rates (fed funds hit 13% in mid-1974) and unemployment hitting 9% in 1975, inflation eventually retreated to a more modest but still problematic level in the mid-6%s. This helped lead Ford to defeat in the 1976 presidential campaign and set the stage for inflation to really get loosed later in the decade. Seeing is Believing What did we learn from this history lesson? I think there are three takeaways: 1. A lot of the inflation pressures in 1973 resulted from supply shortages. The commodities in play were different from 2023 (e.g., crude oil versus food/autos/housing), but the fundamentals were the same. Only when supplies met demand did prices get back in line. 2. Inflation-fighting campaigns are multi-year efforts. Core inflation averaged over 11% from 1979-1981, at a time when fed funds averaged 13%. This may be an extreme case in terms of the values but not the durations. 3. It’s easier to print a bunch of tchotchkes that proclaim to “WIN” than to actually whip inflation now. I think Jerome Powell would tell you the same thing. ■ The Show-Me Banker Magazine | 25
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