Paying More for Money
By GEORGE J. CHURCH
Interest rates are normally an arcane subject, thought to be of passionate concern only to bankers and other financiers, and not fully understood even by them. Yet one way or another interest rates are paid by everyone who borrows money, which in the modern credit economy means just about everyone, period. Interest rates help to determine whether a business can hire workers, whether a consumer can afford his or her dream house, whether a farmer can plant seed. If they escaped the front-page headlines and the TV news in the past, that was because rates usually changed only slowly and by small amounts.
No more. In the past three years, interest rates have shot up higher than anyone could have imagined earlier, and they have suddenly become Topic A in the beleaguered American economy. The high cost of money has crippled the Administration's economic program and endangered President Ronald Reagan politically. Expensive and scarce money has begun driving homebuilders, auto dealers and businessmen from every walk of life out of business, and in such numbers that bankruptcies around the country are beginning to rival those of the Great Depression. The cost of money is crimping the investment that U.S. industry needs to make to become more productive. Sky-high rates are putting state and local governments everywhere in a financing bind, forcing up the cost of borrowing and driving down the ability to spend for schools, roads, sewers and just about everything else that people expect and need from the governments that serve them.
Worst of all. America's money miseries have become the ghoulish flipside to the Good Life. For cash-squeezed consumers by the millions, shopping on credit for everything from a new suit of clothing, to cars, kitchen appliances, even a roof over one's head, is increasingly painful. Indeed, by the common consent of economists, towering interest rates have done more than any other single factor to drive the U.S. into a recession that still threatens to push unemployment to a post-World War II high.
Now, at last, the rates are coming down--or are they? For the moment, the news is good. On Wall Street last week, lenders bid down some key short-term interest rates sharply. For example, the interest on six-month Treasury bills dropped to 12.7%, down about Y2 percentage points since mid-February. Also last week major banks across the country chopped their prime rate on business loans, the most important single interest rate in the whole financial structure, by half a point, canceling an increase posted only a week earlier. That leaves the prime at 16.5%, a full five points below its record high of 21.5% posted in mid-December of 1980.
But no one can rejoice very much so far. For one thing, it is anything but certain that the declines will continue. Pessimists in the financial community still expect rates, after sliding for a while, to turn around and march up past even their recent peaks--especially if the Reagan
Administration and Congress cannot trim menacing budget deficits. Moreover, some highly important interest rates have yet to budge the slightest bit. Standout example: the interest rate on long-term corporate bonds is hanging around 16%, a level that severely hinders investment. Few corporations are willing, or indeed even able, to commit themselves to pay such a computer-busting rate for, say, 30 years.
Worse, even those rates that have edged down still impose costs on borrowers that no one but a Mafia loan shark would have dared demand in most years past. Indeed, if there is one point on which economists of every shade of opinion agree, it is that the U.S. cannot enjoy a vigorous recovery from the present recession, or perhaps even much of a recovery at all, unless interest rates fall much more sharply than they have so far. "It would take a drop of five to six percentage points for industry to get up on its feet," estimates Richard Peterson, senior vice president and economist of Continental Illinois National Bank & Trust Co. of Chicago. A comparison with history is helpful. In 1978, the last year in which housing construction and auto sales could be said to have boomed, both the prime rate and interest rates on new mortgages averaged around 9%, little more than half their present levels. y no coincidence, 1978 was also the year before a towering (6 ft. in.), burly (240 Ibs.) banker named Paul Volcker became chairman of the Board of Governors of the Federal Reserve System. His appointment by President Jimmy Carter was almost universally hailed because Volcker promised to be a man who had a plan for controlling inflation, which was galloping along at a rate of 13.3% during the year in which he took office. Also, Volcker was seen quite rightly as a man with the toughness to carry out his plan. The essence of his strategy: deprive inflation of its monetary fuel.
Volcker alone did not push up interest rates, nor is he singlehandedly keeping them high now. But by law he and the six other governors of the board have the prime responsibility for creating money, a power that they exercise independently of the President. Since interest rates are essentially the price of renting money, Volcker has his hands on one side of the supply-demand balance that sets those rates.
The demand for money, in the form of lendable funds, is determined by many factors: the growth of the economy, the rate of inflation (consumers and businessmen need to borrow substantially more when prices are rising at a 10% rather than a 5% pace) and, of extreme importance, how much the Federal Government needs to borrow to cover ballooning budget deficits. The Federal Reserve has at its command various devices that can in effect create the money needed to meet this demand (see box). And had Volcker chosen to use them lavishly in the past few years, he might have kept interest rates from skyrocketing as much as they have. By the same token, if he chose to expand the nation's money supply more rapidly now, that probably would produce lower interest rates, at least temporarily. On the other hand, Volcker believes that boosting the supply of money would eventually lead to more inflation, increased demand for credit and, ultimately, higher interest rates than ever.
That is precisely what Volcker is seeking to avoid. In his view, previous Fed chairmen, though they tried sporadically to keep down the growth of the money supply, erred by devoting far more attention than they should have to smoothing out short-term fluctuations in interest rates. That policy led them most of the time to create too much money for the financial system to absorb, thereby intensifying an inflationary spiral that was already being fed less by healthy growth than by excessive past jolts of money and credit. Shortly after taking office in August 1979, Volcker proclaimed a different policy: he would focus on permitting only a slow growth in the supply of money and credit--insufficient to fuel continued rapid inflation--and let interest rates go wherever the market would take them.
His success in following that approach has been far from perfect, and at times the nation's money supply has swung up and down erratically. But on the whole, Volcker proudly asserts that he has done just about what he said he would. In the process, however, he has become the nation's prime scapegoat for all its economic ills. The cover of the January-February issue of the Tennessee Professional Builder, a construction-trade publication, consisted of a WANTED poster of Volcker and the other six governors of the Federal Reserve (THE MALEFICENT 7), charging them with "premeditated and cold-blooded murder of millions of small businesses" and "kidnaping (and holding for ransom) the American dream of home ownership." R.K. Resmondo, who runs a cattle ranch near Kissimmee, Fla., has a simple solution for high interest rates: "Take a stick and run Mr. Volcker out of the country."
The heat on Volcker has been hottest of all in Washington, which has hardly surprised him. Members of the Reagan Administration, chagrined because high interest rates have plunged the economy into an unexpected recession, have been quick to blame Volcker for their troubles. Ronald Reagan, asked at a press conference in January whether he thought Volcker should resign, declined to comment, on the ground that the Federal Reserve is an independent entity. This was scarcely a pleasant augury for Volcker, since Reagan will have to decide whether to reappoint him as Federal Reserve chairman when his term expires a year from August.
Reagan met with Volcker alone in the White House living quarters on Feb. 15--the first time the two men had ever conferred without aides, and only the fourth business meeting between them since Inauguration Day. Three days later, the President changed his tune, volunteering at a press conference that the Administration and the Federal Reserve would try to work in concert.
In reality, the rapprochement is primarily political. Reagan knows that any open breach with the nation's central bank could only hurt his Administration. Volcker is already making the convincing argument that the Administration's runaway budget deficits, which are expected to top $110 billion this year alone, are simply driving interest rates higher. A full-blown quarrel between the Federal Reserve and the White House would only draw attention to Volcker's arguments.
Other Volcker critics are hardly so restrained. Congressmen, their ears burned by constituents' tales of woe about then-inability to pay high interest rates, seethe with helpless frustration. Henry Gonzalez, a Democratic Representative from Texas, has made the grandstand play of calling for impeachment of Volcker (the only way a Fed chairman can be removed). Jim Wright, another Texan, who is Majority Leader of the Democrat-controlled House, last week called for punitive taxes on lenders who charge excessive interest rates, a measure that he knows cannot be got through Congress anyway. Howard Baker, Majority Leader of the Republican-controlled Senate, grumbles that the Federal Reserve "should get its boot off the neck of the economy."
In the face of such hysteria Volcker remains unflappably impassive. His words and manner are mild. But he argues with quiet force and conviction that the Reagan Administration has put him in an impossible position in its rush to cut taxes and boost defense spending to the limits and beyond. The more that deficits increase, the greater grow the Government's borrowing needs to cover them, and the stronger grows the demand for money. As a result of what is looming as perhaps the biggest deficit explosion hi the nation's history, the Fed can bring down interest rates only by stoking the economy with what might wind up becoming the biggest new dose of inflationary money and credit yet. To Congress last week Volcker praised Reagan's efforts to stem the tide of red ink by reducing nondefense spending, but added mildly that "if I had my druthers," he would reduce the deficit "even more." If that cannot be done by whacking away at spending, he said, then maybe Congress should consider some tax increases--selective raises in excise (sales) taxes, perhaps. Said Volcker with heartfelt sincerity: "Give us some help."
Underlying Volcker's soft-spoken style is a rock-hard confidence in his convictions. In paraphrase, Volcker's policy is roughly this: the Fed dares not increase money supply sharply. That would only result in another round of inflation. Price boosts have in fact been slowing encouragingly, and last week the Labor Department reported that consumer prices rose at a mere 3.5% annual rate in January, the smallest increase in a year and a half.
The fact is, Volcker no more merits sole praise for that progress than he deserves sole blame for high interest rates. But many financial experts insist that the two developments must at least be considered together. Says Rudolph Penner, head of tax policy studies at the American Enterprise Institute in Washington: "We are trying to switch from an inflationary society to one with lower rates of price increases, and the Federal Reserve has been trying to help by slowing the growth of the money supply." Adds H. James Toffey, a managing director of First Boston Corp., a New York investment firm: "I think Paul Volcker has done an outstanding job, even if the White House criticizes him for not hitting his money supply targets every week. No central bank ever does. In the meantime, no one seems to notice that we are not talking about inflation anymore."
One person who still talks about inflation, and incessantly, is Volcker. He fears, with considerable justification, that the gains could all too easily be lost if money begins to flow in torrents from the Fed, prompting a premature expansion before inflation is more thoroughly wrung out of the economy.
By the time he became Fed chairman, Volcker told a gathering of 1,500 businessmen and bankers in Manhattan last week, "we no longer faced a choice between a little more inflation or a little more unemployment. Somehow we ended up with both." He added that "pumping up growth in money and credit today could only threaten the longevity of recovery" with the menace of renewed inflation. A big expansion of money supply, he said, might not even bring down interest rates very far for very long, because lenders would shortly demand higher interest again to guard against having their returns eaten up by a recurrence of rapid price hikes. Indeed, Volcker argued that if the Fed had not restrained the growth of money supply, "interest rates would ultimately be still higher" than they are today, "and remain there longer."
Thus, Volcker has made it plain that he intends to provide only a bit more money to the economy this year than he did in 1981. That policy will possibly permit some recovery from the current recession, but not a rebound anywhere near so vigorous as President Reagan predicts and people everywhere are hoping for. If the Administration and Congress want a drop in interest rates great enough to promote faster growth, Volcker's position is that the only way they can get it is by whacking down the deficit. That way, the Government will no longer be driving up interest rates by competing with private borrowers for a limited supply of lendable funds. If the Administration and Congress will not slash the deficit? Well, sorry, says Chairman Volcker, then interest rates will stay high, and growth, if any, will remain slow. Such is the price that the nation must pay for containing inflation. Unfortunately, the costs are climbing daily.
Housing. Builders started work on a mere 1,086,000 houses and apartment buildings last year, the slowest pace since 1946, and annual rates in the past few months have dropped lower still. Sales of existing homes plummeted to 2,351,000 in 1981, 40% below the level in pre-Volcker 1978. Housing's woes are especially maddening to builders and real estate men because they figure that the rate at which people are marrying and forming new families would support sales of 2 million new and 5 million used homes a year. Michael Sumichrast, chief economist for the National Association of Home Builders, gloomily calculates that the prime rate would have to drop to 13%, with a corresponding decline in mortgage rates, just to maintain last year's depressed pace of sales.
When an upturn does come, many builders may not be around to enjoy it. Thousands have gone broke already, and many thousands more are barely hanging on. Turkey Creek, Inc., a family-owned contracting firm in Gainesville, Fla., was selling an average of two new houses a month until March of 1981. In the eleven months since then it has sold two more, total. Meanwhile, the company is paying $14,400 a month interest on loans taken out to put up 24 houses that are still empty. Says President Forest Hope: "We're having to put money back into the business that we had invested in certificates of deposit for our children's education, and we have cashed in all our life insurance policies." Hope thinks he has kept his business solvent by such desperate measures, but, he admits, "I haven't seen a financial statement since June 1980 because we can't pay the auditors."
Autos. Sales of U.S.-made cars plunged to 6.2 million in 1981, the lowest level in 20 years. Signs of a vicious circle are appearing. Interest rates on auto loans, averaging 16%, discourage buyers, and unsold cars start piling up on dealer lots. Meanwhile, the dealers have to borrow at rates generally two or three percentage points above the prime to support the bulging inventory. Not only has that burden alone helped to drive some 3,200 dealers, or roughly one in eight, into bankruptcy in the past 2 1/2 years, but the survivors, in order to trim costs, have now begun ordering fewer and fewer models for their showrooms. That cuts down the volume of walk-in trade and reduces sales still further.
Chrysler last week reported a 1981 net loss of $475 million, bringing combined losses of all the major U.S. automakers to $5.5 billion over the past two years. The red ink threatens their ability to raise the $60 billion that they need to spend on retooling by 1985 to build smaller and more fuel-efficient cars and meet import competition. Says Robert Stempel, general manager of General Motors', Chevrolet division: "If the economy does not turn by the end of this year, it will be the beginning of the end for the U.S. auto industry."
Investment. Economists of all schools agree that the nation cannot in the long run enjoy noninflationary growth without a large increase in business spending for new plants and equipment. But Commerce Department surveys indicate that U.S. industry generally plans to spend .5% less on capital projects than last year, after adjustment for inflation. One major reason, of course, is that uncertainties over the course of inflation and recession have made it difficult to calculate whether the products of a new factory could be sold profitably. Indeed, persistently high interest rates have thus far seemed to many businessmen to amount to nothing more than a devil's trade in which one menace, inflation, is swapped for another--the cost of money itself.
Some economists go so far as to calculate that towering loan charges have just about wiped out the investment-stimulating benefits of Reagan's tax cuts to business. Moreover, companies unwilling to shackle themselves for decades to the high rates now charged in the long-term bond market are increasingly turning to short-term financing as a way to raise tide-me-over cash until long-term rates ease back. In the process, the so-called commercial paper market, where such funds are often raised, has grown into a wobbly mountain of debt exceeding $164 billion, up from $83 billion in 1978. Since few, if any, companies would even consider trying to finance long-term projects by raising short-term funds at rates that could leap to new highs every time the debts had to be renewed, more and more firms are simply scrapping expansion plans altogether. Last week American Airlines joined the list, canceling an order to buy 15 new Boeing 757 jets for $600 million and dropping options on 15 more. By way of explanation, the company gave the bluntest and most understandable of reasons: no money.
Bankruptcies. Dun & Bradstreet, the credit-reporting firm, last year counted 17,043 business failures, barely under the post-World War II record of 17,075 in 1961; before then, the number had not been so high since 1933, one of the worst Depression years. This year has started off even worse. Failures in the first seven weeks totaled 3,065, or 50% more than a year earlier. In the small town of Barnesville, Minn. (pop. 2,500), Thomas Fisch, head of a building-supplies firm, counts seven businesses that have recently gone bust in his home town. Included are a radio-TV shop, a Ford dealership, an auto repair shop and one of Fisch's building-supplies competitors. Fisch worries that his own business might join them soon. Says he: "Because of high interest rates, people can't afford to remodel homes, and I can't afford to carry my inventory."
Some business analysts suspect that the Dun & Bradstreet figures, grim as they are, actually understate the real business death rate. The organization, they point out, counts only failures that involve a loss to creditors, and for every one of these, there are an estimated ten more businesses that just quietly close up and quit. One belongs to Durward DeChenne, who in 1960 started a business selling marine equipment and, later, snowmobiles in Clarkston, Wash. By 1979 the business had grown to a sales volume of $2 million a year. Then came the interest-rate surge, and since many of his customers had traditionally financed their purchases instead of paying in cash, DeChenne's sales plunged. By 1981 his business had shriveled to amere $600,000, and DeChenne was paying 24% interest to carry his inventory. Says he:
"There isn't any way in the world you can pay that kind of interest and make it." In November he discharged his five employees and began liquidating his inventory, at prices so low that he has lost almost all the money he had accumulated in 21 years in business. Says DeChenne, 65: "I had hoped to succeed and retire with a reasonable income. Now I'm just trying to retire."
Consumer Buying. In the late 1970s, consumer installment debt outstanding jumped by anywhere from $35 billion to $43 billion annually, intensifying the decade-long inflation. But last year, debt expanded by only $19.6 billion, a slowdown that is itself proving disruptive. The University of Michigan's most recent quarterly survey of consumer attitudes, conducted late last year, leaves little doubt as to why: exorbitant interest rates.
Though consumers are popularly believed to have only a vague notion of the amount of interest that they pay on credit purchases, Survey Director Richard T Curtin found them actually to be quite well informed. His researchers asked those who were postponing purchases what interest rate they thought they would pay if they did buy. Their answers averaged 17.5%--which was almost exactly right. How much would they be willing to pay? Average answer: 11.9%.
Retailers glumly affirm that this wariness is holding down sales of all sorts of goods. In Boston, Dennis Gedzuin, manager of The Riverboat, a women's clothing store, estimates that charge-card purchases dropped by a third at his store last year. Partly as a result, last week The Riverboat still had some merchandise left from 1981 and was clearing it out by offering discounts as high as 90%. In Milwaukee, Stanley Waldheim, president of Waldheim's Furniture Co., complains that "time payments for furniture are at a standstill. That has eliminated a big segment of our business." Unable to make enough money on cash sales to cover its rising costs--including 18% to 20% interest rates on inventory loans--the Waldheim store, founded in 1892, is about to close.
Wary though they are about taking on more debt, a growing number of consumers seem to be unable to pay off the debts that they already have. Personal as well as business bankruptcies are rising sharply. High interest rates, of course, are far from the only factor. Also important is a general relaxation of federal bankruptcy laws. Moreover, the recession itself, by forcing up unemployment, is also adding to the bankruptcy rolls. Nonetheless, in Oakland, Calif., Bankruptcy Expert Steven Flander argues that excessive mortgage payments have become a whole new menace that is forcing more and more people into insolvency. He adds that while his clients used to be primarily lower-or lower-middle income, "now there is really no classification. We see doctors, attorneys, real estate people."
Local Government Financing. States, cities and counties traditionally raise much money for public works by selling bonds. The costs of doing so are becoming staggering. One index of interest rates on such municipal bonds shows them averaging around 13%, almost exactly double the rate in 1979. That is a truly astonishing rate, because the interest on these bonds is exempt from federal income taxes; for a buyer in the 50% tax bracket, a 13% municipal-bond yield is equivalent to a 26% yield on a corporate bond. Moreover, states and cities are incurring these costs at a time when the recession is crimping tax receipts and the Reagan Administration's budget-cutting efforts are curbing the flow of federal grants-in-aid.
Unwilling, or even unable, to pay the towering bond market rates, many localities, like corporations, have begun borrowing in the short-term market. Now, however, some are reaching the limit of their ability to do so. Bade County, Fla., which encompasses Miami, has run up $200 million in short-term debt, and county commissioners believe that is about as much as the county's taxpayers can afford. As a result, if rates do not ease back to more tolerable levels, the commissioners may wind up having to pick and choose among a long list of public projects, from seaport and airport expansion to water and sewer projects and roads, deciding which to shelve and which to go ahead with. Says Stacey Hornstein, the county's capital improvements coordinator: "I can't tell you we won't stop any project."
Agriculture. Farmers traditionally borrow heavily in order, among other things, to finance planting and machinery purchases, paying off the loans when they sell their crops. For some, the costs are becoming ruinous. In northwest Wisconsin, Walter Betzel grossed $100,000 last year from his 350 acres of corn and oats and his 30 milk cows. Some $19,000 of the amount went right off the top for interest payments. After his interest and other operating expenses, Betzel had $5,000 left to spend on his wife and three children. Says he: "We're sick of it. We don't go out to any movies, we don't go out to eat."
Interest costs have set off a kind of chain reaction in the farm lands. Food processors rely on short-term financing to stock up on the raw goods that they package, can and otherwise process into food. But to hold down interest costs, the processors are now slashing inventories and buying less from their farmer-suppliers. Those cutbacks are coming precisely when the farmers need every penny to pay their interest charges. The squeeze on the farmers is forcing more and more of them to try to cut back on their interest burdens, and many are doing so by postponing the purchase of tractors, combines and other farm equipment. The retrenching simply passes the interest-rate misery on to the farm-equipment manufacturers, which are starting to buckle under their own swelling inventories.
Giant International Harvester Co., hurt by slumping sales and high interest costs of its own, has lost $800 million in the past two fiscal years and almost $300 million more in the first quarter of fiscal 1982. The company announced last week that it would sell its 50% interest in a profitable Japanese company, a move that some analysts interpreted as a desperate measure to raise cash.
The prospects that interest rates will soon come down, and stay down, are dubious at best. Some financial experts do look for further declines. Leif Olsen, head of the economic policy committee of Citibank, believes that the recession will soon dry up corporate demand for credit, relieving the borrowing pressure. Secretary of the Treasury Donald Regan argues that the second stage of the Reagan tax cuts, a 10% slash in income tax rates taking effect July 1, will prompt much more savings by individuals, thereby increasing the supply of lendable funds and relieving pressure on interest in yet another way.
Perhaps so, but powerful forces other than tight money alone will be working to keep interest rates high, no matter what Volcker does. In large part, the jump in interest rates over the past few years represents a belated catchup by the price of money with the rise of all other prices since the mid-1960s. Through years of high inflation, many interest rates--on mortgages, consumer loans, bank savings deposits--were held down by federal or state controls. Most of these controls have been dismantled.
Interest rates have now caught up with inflation, and with a vengeance. With inflation dropping, the "real" return on many loans--the amount by which the interest rate exceeds the expected rate of inflation, thus representing a genuine gain to the lender--averages around 8%. That figure amazes many financiers: it is just about double what had been considered the historic real return.
The trend, of course, is benefiting many people. The same consumer who pays high interest on a mortgage or auto loan may well be collecting high interest on a certificate of deposit or an investment in a money market mutual fund. Those who can avoid borrowing and have dollars to lend are reaping a bonanza.
For all that, the extraordinary rise in real return would seem to leave room for a drop in rates that would help many more people than it would hurt. Yet it would be most unwise to bet on such a chancy prospect. For one thing, uncertainties over the size of the federal deficit are themselves acting as a prop against steep rate declines. Adding "off-budget" financing by federal credit agencies to the stated deficit, the Federal Government borrows about 35% of all the lendable funds in the country. Henry Kaufman, chief economist of the investment banking firm of Salomon Bros., predicts that as a rising deficit bumps up against the borrowing demands of businesses and individuals, "the downward trend of interest rates will probably reverse before midyear, and in the second half, long-term rates will once again threaten their peaks of 1981." Worse, there are widespread fears that the actual deficit will soar beyond Reagan's projections of $98.6 billion this fiscal year and $91.5 billion in fiscal 1983. Alice Rivlin, Congressional Budget Office director, last week revealed grim new estimates projecting steadily increasing deficits reaching nearly $140 billion in 1985, even after the unlikely passage of all of Reagan's spending and revenue reforms.
A few Fed watchers suspect that Volcker himself might eventually cave in to pressure and pump more money into the economy in an effort to bring down interest rates--especially if today's high rates seem to be thrusting the economy into an ever deepening recession, with no end in sight. If the economy continues to spiral down, says one financier, "by election time every politician in the country will be running against Volcker."
But Volcker's stand nevertheless has impressive support in the business, financial and academic communities. Members of TIME'S Board of Economists wish that Volcker, while continuing to hold down the growth of money supply, would try a mite harder to prevent interest rates from gyrating so much. But in general they give the chairman of the Federal Reserve a strong and well-deserved vote of confidence.
Says Alan Greenspan, a Republican and non-Government adviser to President Reagan: "I think Volcker is doing as well as anyone could, given the current economic environment." Adds Otto Eckstein, who served on the Council of Economic Advisers under Lyndon Johnson: "Volcker is the strongest Federal Reserve chairman in history."
Even in Congress, Volcker has strong champions. Says Colorado Republican William Armstrong, a member of the Senate Banking Committee: "People think that every morning when he shaves, Paul Volcker decides what interest rates are going to be that day. It's a myth. There is nothing the Fed can do about it with the massive deficits we are rolling up." Adds New Mexico Republican Harrison Schmitt, another member of the Senate Banking Committee: "You can yell and scream at him, but in your heart of hearts you don't want him to back down."
In all of public life, no one has put his career and his energies more wholeheartedly into a more thankless task than has Volcker. In his search for long-term and lasting relief from the debilitating inflation that has racked the economy for more than a decade, Volcker has angered many people and baffled many more. Yet with grinding certainty he is reaching his goal of bringing inflation to heel. By common consent of all who know him, Paul Volcker is an exceedingly steadfast man, and one who seems determined to continue on his course. --By George J. Church. Reported by David Beckwith and Gisela Bolte/Washington, with other U.S. bureaus
With reporting by David Beckwith, Gisela Bolte
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