New Aspect

Inflation, which is here, got a new aspect last week. The Commerce Department announced that national income in September had reached an annual rate of $92 billion, highest ever and 21% above 1940.

In themselves, the figures prove that money is circulating fast & furiously. But when they are compared with the Bureau of Labor's cost of living index, they become ominous (see chart). U.S. purchasing power (income divided by living costs) has soared since war's beginning, is higher than ever before. The widening gap between living costs and purchasing power is the "extra money" Treasury

Secretary Morgenthau is trying to sop up.

Morgenthau's sponges are taxes, still more taxes; defense bonds, perhaps enforced savings. But he is bailing a ship into which the defense boom dumps new waves of purchasing power every week. During the first week of December, for example, some 8,000,000 citizens will draw $400.000,000 in Christmas Club money out of the banks and start spending it. Such buying pressure, exerted on a decreasing volume of consumer goods, will either 1) force prices upward to the point where "prosperity" will be a mirage, or 2) if prices are controlled, hasten the need for consumer rationing.

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