Current Policy and the Future Capital Stock

I am pleased to appear at this first seminar of the Task Force on Capital Needs. It is appropriate the Task Force has chosen to consider long-term problems at the very beginning of its work. The economic problems that vex us in areas as diverse as energy, transportation, inflation and unemployment are to a considerable extent problems that we have created by our neglect of the long-term consequences of actions taken to solve short-term problems.

During your seminars and discussions in the next few weeks you will be advised, frequently, about the importance of stimulating the economy. You will be presented with arguments and statistics suggesting that you can get something for nothing - more output, more employment, more economic well being, more capital and more consumption by having the Federal Reserve print more money now. For a short-time that argument if accepted will appear to be correct. Increased monetary expansion now will raise employment next year but only at the cost of more inflation in 1977 and later years.