Independent Banker - September 2023 - 35

Next: Promoting a new M&A framework 
(i.e., net of inflation), so it too was
caught up in this vortex. That period
is now referred to by economists as
the 1973-75 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
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.
" 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-'74),
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.
Education on Tap
Balance Sheet Academy registration open
There are still some slots available for the ICBA Balance Sheet
Academy on Oct. 16-17 in Memphis, Tenn. Up to 11 hours of CPE
credit are available. The event is hosted by ICBA Securities and its
exclusive broker Stifel. For more information or to register, contact
your Stifel sales rep or visit icbasecurities.com
Bank Management Webinar in September
Marty Mosby, Director of Enterprise and Risk Management Analytics
for Stifel, will present his quarterly webcast that will discuss the
current operating environment and competitive advantages for
community banks. The event is Sept. 14 at 1 p.m. Eastern. To register,
contact your Stifel sales rep.
2. Inflation-fighting campaigns are
multiyear 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.
Jim Reber, CPA, CFA (jreber@
icbasecurities.com), is president
and CEO of ICBA Securities, ICBA's
institutional, fixed-income brokerdealer
for community banks
independentbanker.org // 35
http://www.icbasecurities.com http://www.independentbanker.org
Independent Banker - September 2023

Table of Contents for the Digital Edition of Independent Banker - September 2023
