4 Wednesday, September 18, 1974 University Daily Kansan OPINION BY 1974 WE'LL HAVE A CHICKEN IN EVERY POT BECAUSE WE CAN'T AFFORD BEEF AND THERE'll BE 2 CARS IN EVERY GARAGE BECAUSE WELL BOTH BE LAID OFF! ' The $2.3 billion that would be authorized by this bill is only a part of $8.4 billion in total for the current fiscal year. We have grown numb to such figures. The digits convey little meaning. As individual items, we have had a few big questions. It is proposed, for instance, to take nearly $15 million from the U.S. in the form of outlaw military assistance to African nations. Amn't it about time that we asked about value received? Ethiopia has been an outspoken military aid. In the name of common sense, what value do Most of the money that would be authorized in the pending bill is for South Vietnam, Cambodia and Laos. And about the only pleasant thing that can be said on this score is that the bill fixes some guidelines that may cut down on waste and graft. Glum. That is about the only adjective that comes readily to mind to describe a recent report from the Senate Foreign Relations Committee on foreign aid in the current fiscal year. If glum won't suffice, try gloomy, dismal or dreary. The committee has recommended an authorization of $2.5 billion for certain economic, credit, credit programs. But plainly the committee's heart isn't in it. About the only pleasant thing that can be said of the $2.5 billion is that the sum is the $24 million the administration had requested for these particular items. U.S. addict of foreign spending Exigency furor was unnecessary Financial exigency. This fancy and mysterious term has created a furor among University faculty for the past year. It commanded the formation of countless committees. It consumed all available time in heated debate. It was defined, investigated and reported upon on pound after pound of paper. Where did this term come from? It now appears that financial exigency is moving more than a term and that the furor was unnerved. Someone predicted last year that by 1894 the University of Kansas would be in just such a financial condition because of declining enrollment. Especially so became the foremost issue among the faculty. By definition, financial exigency is the adverse financial condition that would necessitate firing tennants. Who would decide which faculty members would be fired first and what methods would be used to determine whether there be across the board salary reductions to receive firings? Should exigency be declared for the whole University or only for certain departments? These are the questions that created all the controversy and captured all the headlines. Now it seems nobody cares and the financial exigency party is over. Enrollment is up this year. A report prepared by the National Association of State indicates that enrollment hasn't declined across the nation and that it would be a long time before it did. A SenEx member said in an Aug. 28 SenEx meeting that exigency probably never would be declared and that it existed only to ease the minds of faculty members. Thursday, the University Senate couldn't muster a quorum to hear and act on recommendations formulated over the past year by committees established to deal with the exigency problem. Everyone has lost interest. So the party's over and all the money, time and effort spent on the issue is lost. Perhaps next time there is an exigent, although may be empty, situation that it can be dismissed in a more exigent manner. Jeffrey Stinson Associate Editor the American people receive in exchange for $11.3 million to Ethiopia? Why are the taxpayers hit for Congress knows the American people have been saddled with providing an annual allowance to more than 100 countries. At By James Kilpatrick even $70,000 to Ghana? For $100,000 in armors to Liberia? For $30,000 in armor to Morocco? It is proposed that we give $30,000 in military aid to Zaire; the sum is equivalent to the income tax paid by 200 middlemen. random, it is proposed that our taxpayers provide in economic or military aid this year, $2.1 million to Upper Volta, $17.4 million to Afghanistan, $23 million to Nepal and $28 million to Turkey. Through the Peace Corp. in Fiji, $452,000 in The list goes on and on. In some fashion—maybe the Swaziland and $181,000 in Oman. How did we get into this lunacy? And how do we get out? Foreign aid simply got to be a habit, says the committee. And it has now become a “near-adictive habitat.” "At present," the committee observes, "the far-flung network of U.S. military missions and military missions and military groups gives bureaucratic momentum to the perpetuation of an extensive program the rationale for which each year more than 600,000 comrades dubious. Through this bureaucracy, the U.S. continues—almost habitually—to dispense hundreds of millions of dollars of weapons in pursuit of stability, 'balance' and the maintenance of friendly relations.' Yet in the committee's view, there is little evidence that such general purposes have actually been achieved in the United States often indiscriminate program." On the contrary, military aid "not only escalates the destructive potential of international conflict but also increases morbidity within the military within those societies and thereby creates undesirable tendencies away from the democratic processes required in the program, in its origins was intended to defend." The committee has recommended a three-year phase-out of general military assistance. If the recommendation sticks, the department will be given some relief in time. Meanwhile the drain continues. When will Congress kick the habit? (C) 1974 Washington Star Syndicate, Inc. Financial policy stagnant By LEAND J. PRITCHARD Any student who has ever taken a course in economics has probably heard of—and forgotten—the "equation of exchange." For those who need to learn the equation, take a course in economics, the equation of exchange is simply an algebraic way of stating a truism; that the product of the unit prices and quantities of goods and services exchanged is equal (for the same time) by the total volume and velocity of money. Velocity is the rate or speed at which money is being spent. Arthur Burns, the present chairman of the Board of Governors, contends that the Fed can't control the volume of It is self-evident from the equation that an increase in the volume and-or velocity of a transaction increases, if prices, the value of transactions increases less, and vice versa. This is merely algebra, but it does give a springbock for launching some economics THE ECONOMIC QUESTION arises from differing opinions as to whether the monetary authorities (The Board of Governors of the Federal Reserve System and the Federal Open Market Committee) can control the volume of money and the effects of changes in the volume and velocity of money on production and employment as well as on prices. money; and he never mentions transactions velocity. On this premise the Fed doesn't try to control the money supply but instead concentrates on "accommodating the money market." As a consequence, the Fed has pursued an un- KANSAN analysis consonciously easy money policy over the last nine and one-half years. Easy money is here defined as a growth rate of aggregate monetary demand (money times velocity) in excess of the growth rate of product and service output. and loan associations and in mutual and commercial banks. These two institutional innovations allow all of us, from the treasurers of the largest corporations to the smallest savers, to hold any temporary surplus cash in an interest-interesting account which can be shifted at历 accumulation, into demand deposits or currency. Both of these institutional practices are newcomers to the economic scene. Although the negotiable CD has been around since 1961, its principal growth has been in investment in the compounding of interest has been instituted largely since 1970. As noted in my previous comment on inflation (Kansan, Sept. 6, 1974), money grew at less than a 2 per cent rate in the decade ending in 1964. During the same period the velocity of money rose from 21 per cent to about 31 per cent. In the nine months before that growth has been at a rate in excess of 6 and one-half per cent, and velocity has steadily increased until it now exceeds 80 per cent. As a consequence, aggregate monetary demand expanded at an annual rate of 13 per cent after 1964 compared to So the Fed, with an assist from the Congress and the Federal Home Loan Bank in reducing motion in reducing money velocity. THE FED ALSO can control the money supply with acco- dence. The Fed controls people in the Federal Reserve System who know this. But they are a small minority and up to no- more had apparently little lure. Every week I receive a publication entitled "U.S. Financial Data" from the Federal Reserve Bank of St. any other type of expansion of Reserve bank credit by $1 million), the money supply would expand almost immediately by around $2.6 million. All the data necessary to correctly estimate the multiplier relationship that exists between member bank legal reserves and the money supply is now available to the Fed. From these data the necessary computations can be made. These include: the ratio of deposit deposits to the number of member banks in each size group and the reserve ratios applicable to each size category; the ratio of demand deposits to total deposits; and the ratio of expansion of non-deposit accounts to the member banks. All of these ratios have sufficient stability to enable accurate extrapolations. "... the money supply increased by $190.7 billion to a total of $336 billion from the end of 1964 to the end of 1974." The validity of the multiplier as a predictive device is also predicated on the assumption that the commercial banks will immediately expand credit and supply additional legal reserves. The inconsequential volume of excess legal reserves held by the member commercial banks in the past thirty years provides documentary proof that they undoubtedly will. How to 'turn the heat' on elite With the chilly bursts of cold weather the University has recently experienced, one is reminded that it isn't too soon to start thinking about how we are going to heat our homes, our classrooms and our campus this winter. The Kansan takes a tongue-in-cheek look at how some upper-echelon people in the University might be able to faintle that extra bit of heating oil to keep warm during the winter. By STEVEN LEWIS "Chancellor, Dykes, the director of buildings and grounds is on his way in to see you." "Didn't you tell him I wasn't in?" CLANK! BANG! CRASH! "Never mind, Mrs. Greenawalt. Harry's already here." "It's been a long time, Chancellor Chalmers." "Harry, why don't you use the door like everyone else? There's no reason you have to come up through the plumbing. Look at the mess you've made of my office!" "I'm sorry, Chancellor Chalmers, but I've been in these tunnels so long that it hurts my eyes to walk in daylight." "Chalmers is gone, Harry, I'm 'Chancellor' Dykes, remember? Now what do you want?" "I've been here for many years, Mr. Chancellor. What I mean to say is that I'm not as young as I once was. All that mounting paperwork isn't easy on my eyes." "Harry, will you take that pipe wrench off my desk! Look, you scratched the wood. I just got this desk last week!" "I know your chief concern is with undergraduate students, Chancellor Wescow. But I've devoted my life to this University. All I ask in my few remaining years is for someone to write me my paperwork so that I can continue to patrol the tunnels." "Harry, look at you! You're getting grease all over my new carpet. Harry, do I come to your office and wreck it?" "My office is a hole in the ground, Mr. Chancellor. All I "Harry, I've got an important meeting with John Beiner in a few minutes. I don't have time to listen to your babble. The people are very different. If you can't do your job, then I will find someone who can." "But Chancellor Lindley, I helped build this University! No one knows as much as I know about the pipes and where all the pipes lead to." have are tunnels. But I'd be glad to take you down there and show you around." office. Your as bad as the deans." "Your office is so comfortable, Mr. Chancellor. I hear this is going to be a cold, long winter. Remember last winter? You'll be out your thermostat so that you show only 68 degrees when the temperature was actually four degrees warmer?" "Harry, Harry, can't you take a joke? Harry, I want you to have my secretary. I can take my own dictation." "How can I ever thank you? I promise you that I'll remember your generosity this winter, Chancellor Nichols, Oops, I didn't mean to get grease all over your suit." "That's okay, Harry. Your handprints on my sleeves look sorita cut. Look how they blend in with the pattern! Here, Harry, have a cigar while I call in my-I mean your—your camelback. I'll cancel my meeting with Beisner and get in here. Harry, let me light your cigar. Now, let's talk about this winter." Readers respond Reactions to symphony KU prides itself in being the elite higher institution of learning in Kansas, yet it is definitely lacking in one immei- bility of providing education enculturation. The festivity the Arts has been produced in recognition of this need, and it does provide a wide range of both contemporary and historical activities; this type of activity is needed on a more regular basis. These events provide enjoyment and Walking past Murphy Hall box office and seeing the long line of anxious faces waiting to purchase tickets for the London Symphony makes one realize how starved the students of the University of Kansas are for true cultural entertainment. If the Fed can control the volume and rate of increase of the money supply and can even take direct measures to reduce interest rates, they so seemingly perverse in refusing to do so? That will be the subject of a future comment. Culture necessary To the Editor. It is encouraging to have the opportunity to attend a concert given by a symphony as well known as the London Symphony, yet it will be disappointing if this is the only one of its kind this year. Christine Erwin relaxation for the students of the University. Musical experience Shawnee Mission sophomore Your review of the London Symphony Orchestra in the Sept. 11 Kansan failed to represent the true musical experience that was presented in Hoch Auditorium. To classify Brahms' "Second Symphony" as weak and unpopular was To the Editor. The review failed to mention the beautiful tone quality, balance, control and over-all wholeness with which the orchestra played. Most people have never and will probably never heard of Brahmbs played with such perfection. It is too bad that the excellence of a fine orchestral performance isn't appreciated. unfair. To some, it might be boring. But that type of people are usually bored by everything in its pursues of "Leave it to Beaver." Oh, and the next time that something as worthwhile as the London Symphony comes to Lawrence, be sure to get Louden and Pickett tickets to the nearest rock concert. Paola Freshman Cindy deWitt Andrew Romine Shawnee Mission freshman In absolute terms, the money supply increased by $190.7 billion to a total of $38.0 billion from the end of 1964 to the end of 1973. Of this growth is attributable to the expansion of commercial and Reserve bank credit. Had not the Fed supplied the member commercial banks with enough reserves, no expansion whatever could have taken place. a rate of 6 per cent in the preceding decade. This is the fuel that sustains our present "two digit" rate of inflation. The excessive growth rate of the money supply since 1964 is therefore the Fed's responsibility, and the Fed can even do a few things to reduce the velocity of money. THE SHARP INCREASE in money velocity since 1964 and particularly since 1970 has been both a cause and an effect of the lofty interest rates. And the lofty interest rates consequent to the high rates of inflation have put an additional premium on minimizing non-interest rates. It is to say, if prices are rising rapidly and interest rates are high, a severe penalty is attached to holding iid cash deposit or invested immediately if this penalty is to be avoided. If these were the only causes for the high velocity of money, the Fed would be limited to侵略 methods in coping with the problem of the high velocity of money is due also to two institutional factors: (1) the issuance of negotiable certificates or deposit by banks; (2) the daily compounding of interest on savings deposits in savings Leland Pritchard, professor of economics, is an occasional contributor to the Kansan opinion page. He teaches courses in personal finance and money and banking. Louis. Included in the publication is a chart labeler "Multiplier." During the past 12 months the multiplier has varied from 2.62 to 2.55. Interpreted, this means that if the manager of the Open Market Account operating from his account at the Bank of New York bought $1 million of Treasury bills for the accounts of the 12 Federal Reserve banks (or if there was THE UNIVERSITY DAILY KANSAN Kansas Telephone Numbers Newsroom—UN 4-6810 Business Office—UN 4-4258 An All-American college newspaper Published at the University of Kansas weekdays during the academic year except holidays and expo- tions. Mail resume to Kara Lawrence, Kami. 600435. Subscriptions by mail are $8.95 for a student account at kami.com/13. $1.35 a semester, paid through the student activity Accommodations, goods, services and employment are provided for the students of qualified qualification. Expenses are incurred by each student. Expenses are not payable to any qualified graduate. 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