Oakland Tribune from Oakland, California • 19

I I I I ii r'5 1 Vst; 40 9 I 1 pv rrvnwiwvwg 1 i 1 i'T. 1 Sunday, January 27, 1980 1 i coins. The rest lsiooueeping entries at.banks.' What happens to this new money once it's i af created? Monetarists believe its spent fairly Non-monetarists say, it may not be spent -at all, and if it ls, the spending depends on people bor- rowing the money at a bank, and whether, they do Is on interest rates. that depends on interest rates. fn Lawrence Roos is iron-1, viBciBa that he knows the cause and cure forjjL InflaUoo and as jpresUent of the Federal Re- VJ h1 in a good position to make himself heard.

ur neighbors even know what he talking about And while the policy he meets, with once a month or so in Washington know. jhat hes saying, they hardly Non-monetarists are as much or more coo about interest rates as about the amount of In recent times the Fed has kept a daily, watch on interest rates, keying its buying; and selling of bonds fcrttentfttt So a decision1! the board on Oct 6 1979, came as a bombshell. In a reversal of its long-held strategy, the open market cohunittee voted Jo start paying more attention to bank reserve than to interest rates. A modern history major who took one course -I to economics at Yale, 1 dont even remember if I in I. passed and who.

became a county executive commercial banker, Roos has found himself in ttemiddle of a dispute that has kept economists' entertained for more than a centtfry. a tMoretical debate, replete, with all the' mathematics and graphs economists wallow in, but one that appears to be increasingly aired in the councils of power where decisions affect any-one trying to buy a house or car, ask for a raise, hold on to a Job. or just cope with grocery bills. Roos believes that the main cause of inflation is the creation of too much money by the Federal Reserve Board, known affectionately around here as-VThe Fed." Jhe basic rate of Inflation in the past five years; not counting the unexpected oil price surges, has been about 7 percent, he says. And the average growth rate in the supply of money in that time has also been about 7 percent Most people think inflation is caused by greedy businessmen or powerful unions, Roos says.

To tell them it'scaused by too much money under Federal Reserve policies produces puzzled IMl fill! a racing economy, because it will only make things worse. Non-monetarists immediately wonder. How can the Fed tell Congress, which created the Fed, not to run an inflationary budget deficit? If we could fence the budget committees to act in accord with monetary policy it would be phenomenal, says Steve Roberts, a non-monetarist and chief economist of the Senate Banking Committee. How many times can the Fed chairman be called to the Hill and beat over the head? Non-monetarists also wonder What about an outside shock like an OPEC hike in oil prices? These weren't caused by the money supply going up. And if money doesnt grow to pay for the oil, some business activity will grind to a halt for lack of money and people will be thrown out of It's a political problem, Ritter of NYU says.

We wouldn't have had this kind of inflation without this kind of higher money supply. But nobody likes inflation, so why do we have it? Because we elect a president every four years. A' democratic society is not going to elect a president who gives it a The policy debate over money centers in the mists have been playifig this particular game. JA. Mill was a British political philosopher and economist who argued the monetarist philosophy in the early 19th century.

Fisher was an American economist early in (bis century memorable for his statement Just two weeks before the Great Crash on Wall Street that stock prices have reached what looks like a permanently high plateau. The British economist John Maynard Keynes came to the fore in the Depression and those who took 'up his philosophy attached relatively little importance to monetary policy. The interest in money has been revived in recent decades under the lead of Friedman, of the University of Chicago, whose students now fill some key slots in universities and government One of them is Robert Weintraub, economist and staff director of the House subcommittee that oversees monetary policy. Weintraub has drawnVa chart that shows the inflation rate since the Korean War. For each year it also shows the rate of growth of the money supply two years earlier, since it takes a while for new pioney to affect prices.

The two lines are fairly close together, indi- TMiaMUull wHfc So )W araliSt MHiiiliVNblaiMalM bed. Great atyte 1199.951 Natcblag deep chib ead oHone eeellehle We ran a survey in the St Louis district just asking )f people knew what the Federal Reserve is, Roos says. Ninety-five percent couldnt re-' spond. One guy said it was a brand of bourbon whiskey his grandmother used to make. Si Although Roos prefers to be called Just a pragmatic his' view is that of a monetarist.

Monetarists believe that the amount of crumpled Mils in wallets as well as everyones checking account balances is the key determinant of the health of the economy. At a conference of economists a few years back, Robert Solow, an MIT economist who rejects the monetarist view, had this to say about a' presentation by Milton Friedman, a Nobel Prizewinner and reigning guru of the monetarists: Another difference between Milton and myself is that everything reminds Milton of the money supply. Well, everything reminds iqe of sex, but I try to keep it out of my papers. If economists can sometimes muster a sense of humor over the issue, they can alsoget downright passionate about it. eating to Weintraub a strong possibility that mon- Feds Open Market Committee.

Its members in-ey affects prices. You cant prove cause and elude the seven Fed governors appointed by the effect, but its consistent with the monetarist theo- president and the 12 Fed bank presidents, Jive of rv. he savs. whom vote in the committee at any one time ry he says. ji I was emotional about it 10 years ago, says Lawrence Ritter, a former research chief at the t-' ft -fgfcj I V- i- I v.

Aftdmrl To Weintraub and other monetarists, fiddling with the federal budget to curd inflation isnt too important Wage and price controls are worse than useless Keep a firm grip on the money supply, they say, and there wont be any money to pay higher wages or' prices. Unions and businessmen would have to keep them down. Just as they believe that Inflation if preceded by too great a growth in money, monetarists believe that most recessions are preceded by sharp drops in the growth of the money supply. There are shades of monetarism, but in general this is what monetarists would -do: Keep the rate of growth of money fairly constant over the years and no higher, or lower than the economy's long-term potential to grow, which is now about 3 percent a year. And, they say, dont start dickering with the money supply to accommodate higher wages or prices or government deficits.

And dont raise the money supply tQ fight recession or cut it to slow lt's in this group that Roos has led the monetarist attack, with mixed success, since he became the St. Louis banks president four years ago. About 10 times a year the 19 committee members gather in the white marble Fed building in Washington. Seated around a mahogany table, they spend. most of a morning hearing.

reports on the economy and debating what to da Their goal is to influence the economy by changing the money supply or causing interest rates to move up or down. More money and lower interest rates are thought to stimulate business activity. When a decision is reached, instructions are sent to an officer of the New York Fed. If the committee wants to raise the money supply, hes told to buy government bonds. His payment becomes new money.

Likewise he can lower the money supply' by selling bonds, taking money out of the economy in payment Less thaw a third of the current basic money supply of some 9379 exists as Mils and 99.951 AttfcUFrtcayM Federal Reserve Bank iif New York and economics professor at New York University. Having learned what was wrong with monetarism, here came a bunch of monetarists saying I was wrong." Ritter has mellowed enough In academe to include in his textbook Money an explanation of monetarism expressed as the diagram of a foot ball play. The caption: Milty Friedman hands off toJ-SMi Mill who streaks down the right sideline akMFcb.l behind a big block (actually a clip) by Swifty Irving Fiher that completely upends big Tommy Mal-thus. A scorecard would indicate how long econo- Delta Continued from Page B-1 SpMimMMtfNoMrttfca Iohm mhbaSiUtiMwSm, 1X5 Iw UoBd 1 wU 54" ertdfc Dtw wAlw MlvctK (uU dat bed hidea laaM. Indian Cut and the Santa Fe railroad embankment Crops include alfalfa, com and asparagus.

Parts of the island surface were 12 feet below sea level when mapped by federal topog raphers in 1952 and may. be. 18 in eff a giant breakwater, below sea level ioday as a result of constantly pounded. by wind-driven 3-inch-per-year peat soil land subsid- floating debris and boats. above the water surface, a slippery, level walkway extending miles across the open water.

The pipe-support pilings, which were not designed for horizontal" pressure, would be- would undermine the pilings and per-haphreak the aqueducts immediately, warns EBMUD Chief Engineer Don Larkin. The EBMUD aqueduct, which carries almost the' entire water Supply foe 1.1 million residents of Oakland and adjacent Eastbay cities, crossed the below-sea-level Delta islands on Orwood Woodward. Island, Lower Jones Tract, Roberts, Island and Wright-Elmwood Tract Ab. available la Mltta -I-. afa-t-g Bethel Island A popular resort community, which has more boats than people.

There are a few small ranches. A peat quarry provides soil for many city dwellers Jersey Island Bounded by San Joaquin Rivef, False River, Taylor -'Slough, Dutch Slough and a flooded former farm island known as Big Break. More than 90 percent of the island is pasture ranched by Ted Halsey, the first Delta islander to convert from crops to cattle in a successful effort to halt peat soil Gwtuui euuii A dike break near the pipelines could be expected to scour out a deep hole; 40 to 100 feet deep, which ence associated with asparagus growing. The amazing effect of peat soil land subsidence is clearly visible on Orwood Tract where the East Bay Municipal Utility District's three big Mokelumne River Aqueduct pipelines ranging from 65 to 87 inches in di ranging iroro oa ui or ukdh ui ui- subsidence, which destroyed other is- ametqr cross tlpe landscape in a lanita 1 that llkp a lands. iyl' i ThcMaf lOOXcattori Hibow KklUM cotlaw.

MtwaT hi My rooa wISoR. Qwm I li. 519.0S la Z4 Nirib sleet and slush cant wait to ravage your car. Not just the finish, but the metal underneath. Miracle Auto Painting helps you fight back.

II Palm. Tract--An island where 100 percent of the land is devoted to raising com. It is bounded by Old River, Indian Slough, Rock Slough and the Atchison, Topeka and Santa Fe Railroad embankment near Orwood Resort. The island, much of which is more than 10 feet below sea sanK arwunu UUIW luua; NeveL will be in grave peril if waves 0f pipes are about 6 feet or more 1 break through Rock Slough dike. above the ground.

Orwood Tract An island east jf orwood Tract is inundated the of Brentwood bounded by Old River, top of the pipes would stand inches, hum i.r;' v' NwWdtofiwwIHRWbfMBW atataiMtatHil HhchIom adS MptOMlWlhlaMCtiMHl tamtatibta at Mdy 8599.951 Opcaa laaqaaaaaliabadtomcaada. IS9.50farS4Maalha. Atmalldown SAN FRANCISCO 2901 GEARY BLVD 221-1414 WOMEN, CAREER SEEKERS AND CHANGERS Where do you go from here with your life? Why Not to I miracle's PRoncnon A BONUS IF. MIRACLE PAINTS YOUR CAR NOW! Noyy get Protection Plus a $25 value free with any complete Miracle paint service. This special automotive payment Is required when financing.

1 RFRKELEY r' 1 1001 UNIVERSITY S4S-41U Master Charge, Financing, Layaways. CONCORD 1 a 90-Day Interest "CONCORDAVE: credit OflHwv 610 Evening or weekend VHBinywv i. al delivery available. Weekdays 10til 9, Sat 10 'til 6. Sundays 12 'til 5.

CALIFORNIA'S LARGEST SOFABED STORE! OVER1JMWGUNUOUS bond-sealer goes under the paint to help prevent rust. keep tne finish coat from lifting or pdeiing. Ypur a Helps car looks better, lasts longer. Offer good through February 29. Miracle paint wnices begin at 89 95-' Guaranteed up to three years.

Drive, in today for a free estimate I A TUmONEREE PERALTA COLLEGE A COMPREHENSIVE community college DEDICATED TO EXCELLENCE- WOMEN'S CENTER Watch let UMapaalae at aaiaawaal SOFABEDS IN STOCW ateialaOahliadtl I0ACLE AUTO PAIOTiriG i- SPECIAL RECEPTION FOR WOMEN Thundoy, Jan. 31, 1-3PM; EBIdg.J03 WELL HELP YOUR CAR SURVIVE. Open weekdays 7:30 to 6:00. Saturdays 9:00 to lOO for estimatM. Oakland San Leandro Fremont DubliO; 893-9602 483-8866 792-6155 8284400 12500 Gompus Drive, Oakland CAREER CENTER Personal assistants in CAREER EXPLORATION, JOB REFERRAL, COMPUTERIZED CAREER AID v.

For Further Information Full CAREER SERVICES 53 1 -49 1 1 Mon. Thurs. until 8 PM El Cerrito Concord Vallejo Richmond 526-1400 825-4822 643-4517 524-4826 I Miracle Truck Painting. Hayward- 785-0755 Walnut Creek 934-7493 mi i.