Conversation 868-008

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Well, Loker is waiting for the capital that we want to get when they get it to the International.

He's well informed, and I think he can do it.

When he's running out, when he first gets it, we can do that.

Fine.

He's done a fine job on this negotiation.

I've always wanted to say it, but we're out of time.

So now we're getting out of time.

We're getting out of time.

I think we just let him sit.

I thought you were drunk.

No.

No more drunk.

Well, no more evaluation.

That's true.

It's true.

However, that crack about this.

Well, you're bringing people to trade.

You've got to figure out how you're making these decisions.

I don't know.

I think we want to speculate against the dollar.

I think we do.

I'll figure it out.

Well, I was going to say, I think all of us, everybody was saying great, great job you've done.

I'm glad you got the shirt and the dollar.

Well, if you're all happy with it, right?

Yes.

What's the best way to proceed?

Get this dollar, start that up.

Well, I think it might be well to just look at the domestic economy type of problems as we see them, and then move into that background, move into the financial discussion.

Right.

And we'll do it that way.

All right.

Very good.

Thank you.

I told you if you'd like, you'd be very welcome.

But let's make it a business discussion.

They're all smart.

I mean, your wife is very smart.

Well, I tried to...

Months over, at the time of our economic report, there was a general season of exceptional confidence from the state of the economy.

We don't know if that's our report.

Since then, there has been a growth-backed idea that there's not enough of these things.

That idea is that the whole thing...

The first fear is that inflation will speed up again.

The second fear is that the interest rate is rising steadily.

The third fear is something in the building, in terms of the termination of sharp barriers in the international money market.

And the fourth kind of new or revived fear is that we're going to have a exceptionally rapid

Thank you.

Let me stay one second to throw a line in here.

I was prepared for a question.

I was prepared for it.

And I was going to say this, that as far as I'm concerned, I would suggest that

as far as it would be necessary to see that it could not continue that rate

But on the other hand, money supply would have to be made that would provide adequate amounts to fuel the economy and fuel the growth.

In other words, he was balancing the two points.

I would say .

I don't want to supply policies in 1968 and 1969 for an error because we went too far in 1968, expanding it too quickly, and too hard cutting back in 1969 if you want to look at it.

Since Arthur has been in charge and so I'm hearing first that more for a, shall we say, policy might hold these things.

So much for that.

Then I said, my reading of this testimony, of this statement by Chairman Burns, leads to one conclusion on a category mistake.

There will be no credit crunch.

I think that's the thing you hear from people in Wall Street.

They say there's going to be a credit crunch, and I think of that.

What do you think about it?

There will be no credit crunch.

The policies of the Federal Reserve will be affected conceptually.

They will be responsible.

They will be inviting us to do what we possibly say all the time.

People say that if they get bigger, they're going to get a credit crunch.

That's that market.

That's the psychology of those guys a lot.

They pump themselves into the fact that there is going to be a credit crunch.

By all these anxieties, it seems to me that they are all considerably exaggerated, but there is some cause for concern and caution about all of them, with respect to the revival of the inflation.

I think that we have not yet attempted to face the revival of the inflation, but also that that is really a dominating force in 1973.

The demand for a situation will be to reasonably

accommodating to the modern way of life once we get over this food cross thing.

And I think we have more and more reason for confidence that in the second half of the year we are going to get over the food cross thing.

The things that we've taken are quite powerful and amazing things that we've been able to do.

Thank you.

Like what?

Well, I mean, which do you think?

Like the cheese.

I mean, I know we did.

We did.

You're going to be sending a memo to me.

I'm going to ask you to sign a letter to the Tariff Commission.

How much is it?

I'm going to have them make an investigation.

Probably be for an acre or something like that.

Yeah.

For the real, you have to, we all have to realize that we have a major problem now with Mills on that because he's...

He is very much indebted, very much indebted, to the non-producers.

He's in our pocket, basically.

And I found that when he called me the other day from Arkansas, the head non-producer guy was with him.

And I say, now, why?

On that occasion, he hit me so hard on what we were doing to the non-producers.

My idea is that all of you must remember that he will not be smart enough to raise you like you are.

He has failed extremely well.

He did support him and us, and of course him and Congress.

So what I would suggest is that we've got to stay absolutely firm in the fight for the government of this country.

It seems small, but hills will do almost anything to get that number.

They're getting very direct about it, but again, they're getting it.

Well, the point is, I told Lucy, I said, look, these guys are doing very well.

And also, I said, we're going to watch it.

In the event that we see that it's hurting too much, we'll turn it around.

We'll probably call it a day.

Okay.

On the interest rate side, you've already covered that.

We expect that interest rates will continue to rise at the short end of the Fed's other task, which is that the state of the economy, they want to keep rising.

And that comes to avoid the other problem of this overheating in the early stages, which could cause a recession.

And we share confidence that we're going to overdo this.

with respect to the consequences of instability in the international monetary markets, I would just comment on what I think are the domestic implications of that, and we will go into that more deeply.

I assume that my own thought is that this does not have serious

I remember the first time when Adam came in, Dave Kennedy came in, Paul Corcoran, right?

I thought the world was coming to an end.

And Arthur came in and said, well, it isn't all that bad.

You weren't that worried about it at that time.

That's how you were a counselor to the President of the United States.

And then I make the turn.

And then there's this interesting development of

We don't think this is there yet.

Thank you.

in general we

We have adhered to our belief that the slowdown that we're going to have will be no more than a desirable slowdown in which the greater expansion can accommodate the potential.

But I think we are also concerned about the fact that if you enter that neighborhood,

uh, shortfalls from your, uh, desirable path become more serious.

The shortfall in the land flow of the Marquee and the Plex County has made, made the cross 35, or an increase on, on the traffic that has slowed down the rate of the unemployment dimension, so that you enter an air, area in which, uh, you would hope to be able to manage things much more precisely than you probably can.

And, uh, we're, uh,

We know we don't do that.

So that we have to do our best to also be prepared for some deviation from what I'd like to see.

And that can actually be a very good assessment of the possibility of being prepared for more flexible use of fiscal policy.

And it should, in my point of view, be desirable to give the economy a little support.

We are interested in a proposition that I can put forward to

Yeah, I saw that in the statement.

But, well, let's get rid of it.

But we don't think that, well, we do think the credit card policy is the correct one to require change at the moment.

We should get to start with that later.

Well, there's a far contrast, I think, between the last time your county got somewhere near where it is today, that is, with unemployment declining in prices at least a little more higher than they were in 2012.

In the mid-60s, we saw a five-by-six vote, and a very impressive increase in the money supply of the city.

We haven't talked about that so much.

We discussed that lesson at the end of the play.

That was in 67 or 68.

Right.

Well, it was a big one.

It was a big one.

You have the second installment in the reduction of the personal income tax.

The second installment in the reduction of the corporate income tax.

A new, large reduction in excess tax.

The Great Society programs on the expenditure side.

A highly expansionary monetary policy.

And on top of that, the work in Vietnam.

You take that from the first one.

Well, that's when the fatal mistakes were made.

It started in the fall of 1963 when prices of raw materials began rising.

And between June of 1964 and June of 1965, the wholesale price level rose 3%.

So the signs were all there.

Precaution and moderation.

By then, I guess, it was called every sign.

Every weapon of economic stimulation.

It was an extraordinary piece of history.

It didn't reflect itself.

I guess why he said 67 and 68.

It didn't reflect itself.

budget deficits at which budget deficits in terms of old-time budget deficits until 67, 68.

606 was summer.

606 was getting the budget deficits pulled down.

It was getting bigger and bigger each year.

What are your deficits each year?

605.

Right.

We're not at that point.

No, I think George is absolutely right.

The economy now is approaching full-blown, and when I'm on the fiscal side, we're practicing, or maybe every other practice, moderation, and likewise.

Let me ask you a question that has to do with the tax debt.

What character am I putting in that?

Okay.

No, not the way I put it.

Because I understood that Congress would be a partner to deal with that argument.

If they are a party, who of them will be the party?

Well, the President decides.

but a change in the investment tax credit isn't necessary.

He makes that proclamation.

All right, now, Congress will have 60 days to act under reorganization action.

During that 60 days period, either house turns it down.

Well, then the president's proposal is dead.

If they don't act, then the president's proposal becomes law.

Now, I have a modification of that.

In case this doesn't go, giving Congress the opportunity to make minor modifications in the President's proposal, not simply taking it or leaving it.

in order to win, you see, their acquiescence in making the field as partners to the enterprise.

But now, but during that 60 days, what is the status?

Because the real problem with the investment credit is the decision-making by prospective buyers.

Well, that's right.

It's a constant argument as of the date of the house's proclamation.

But you don't know really what condition you're in.

Assuming such a proclamation were made yesterday, until the end of 60 days, I as a prospective buyer don't know whether to buy or not buy during that 60 days.

And then what you get is the whole accordion process of holding up orders, accelerating orders, and the whole thing begins to...

to work part-time or productive during that 60-day time.

That's the problem in the world of decision-making by buyers.

He says they're trying to play the game.

The other side are trying to guess the decision.

That's why it has to go faster.

That's true.

He said, look, we're going on maybe 60 days.

He said he was in March or a period.

Maybe we can get it done.

We don't need that much.

It's just the nature of it.

You can make it a 50-day period.

Thank you.

That's a great, great degree of discretion.

Thank you.

That's something that was used by somebody who wants to take out every wiggle in the enemy that it will turn out to be destabilizing and perverting people's minds.

That's something to worry about because the law will be us.

I have a question.

When do you testify?

Yeah, when do you now presently think you're going to cross the route?

Probably early April.

the idea of flexibility has been suggested not only in this field but in others as well but this would be the old thing this is something that congress has never provided before

personal income tax rate, and that proposition is posited in a little different way, at least in the last writing about it, namely that Congress would, so to speak, establish its own procedure for doing something.

It's kind of a fast track that would be agreed as triggered by a presidential request.

And we've not involved arguments about all the tax structure, but rather to increase or decrease the rates on the personal income tax within a certain span of a rather simple kind of change.

So these two things we talked about last year.

Sometimes in a matter of this sort, rather than just sending to the Congress those things that we have to go for, we're going to go all out for.

If you can put in something that is intriguing, that can stimulate thinking, it's just a good idea, and then here it may pick up the next year.

I think it was just an idea that I thought of.

So to me, I wouldn't have to be, have to figure that this is something that we were

Well, that's right.

I wouldn't have to figure that this is something that it's a great defeat and we don't get it, but we ask the Congress to consider it.

In other words, you might present it to them that way, that you could say Dr. Burns has presented this and the strategy is that we'd like the committee to consider it.

You know, we think it's a positive recommendation.

Do you know what I mean?

You work out the language, of course, on that basis, but I'm not saying that you do this, but I'd like to create there are two kinds of things that are brought up.

Let me just go around here for a minute.

Ron, I talked to Pete Brennan earlier this morning about that accident and asked him to go out to see what first examined the situation to see what any regulations with regard to safety and so forth.

We have very good safety regulations.

And he said he was

I don't know of any federal regulation involved in that kind of action.

25 stories come cracking down, 30 people get injured, 5 get killed.

I wonder, I would imagine there may be a safety law.

Pete is, of course, being in construction, he loves to go to the scenes, which is made order for him.

He can go out and talk to the men.

He's going to talk to the men at the job and all that.

We've discussed both of these tax changes and questions, and they are rather different, as one would analyze the service suggestion.

Part one, the investment tax credit hasn't been moved around a lot since it was passed.

It's been taken off and put on a couple of times.

And that creates a certain uncertainty about it.

And it is still under attack by the labor liberal people.

It's something that ought to be gotten out of the law altogether.

So those who think it's a good thing in the law argue, well, the best thing you can do is just leave it alone for now.

Maybe this is a good idea, but don't push it right now.

That's one kind of an argument that has been...

The only way you would be moving it is to, in effect, raise taxes through this device as they move to dampen down investment.

The framework of your general objection against raising taxes, I don't know whether that would fit or not, but this would be it.

You would be asking for authority that could only be predicted as suggesting it in cross-taxes.

But we will give you such an order.

No, we shall work with cross-taxes.

The investment tax, the variable investment tax quote...

I want you to know a word of history.

We were asked by the Congress to make a study of the housing problem and the instability of the housing industry.

What can be done to moderate these fluctuations and to stabilize them?

Partly for the sake of those employed in it, and partly to maintain the whole building activity that it would recently model more or less consistently.

Now, if it was on that connection that we came forward with that proposal, sure, it would help to stabilize the economy.

But, in addition, it would release funds

which otherwise would be going into land and equipment expenditures to lease funds for the home building industry.

So this is of very considerable importance in that context.

And that problem will be with us as a matter of probability by the fall of this year.

So if this is not the plan, we better start thinking of other plans.

Now, we went to study, and there were other proposals.

This is the most promising one to do.

We're dealing with the housing problem.

We're dealing with it for the purposes of getting it going.

Keeping it from...

by the flexible investment credit.

Just one more point along that line, Mr. President.

Maybe if this entity is a very politically sensitive matter of that investment credit one, maybe the best time to bring in, introduce a flexibility is when the most immediate step, the next step to be taken might be one that has a slight increase because then you will

I don't feel the...

I don't think you...

I don't think you're listening.

I don't feel, I don't feel, George, that politically the idea of, well, this is going to be a violation of race and taxes and so forth, it would bother too much on this account because it's so technical and it's going up and down and nobody's going to say it.

It also isn't going to raise taxes for the average guy.

But it's huge.

When we hear from John Econ, when he had questions about the sanity of the people and brought us to Fox Fire, he said, look, all that you've done to business, now business is booming, investment is booming, you're coming back on the consumer, you're coming back on all the social services.

Why don't you take a step away now?

It would be good cyclically, and it would be good for their standpoint in terms of priorities.

And...

They give ground to that.

You know what I'm proposing?

Putting a seal on the amount of bank credit that is made available to large corporations.

Okay, I'll be shot back to it.

First of all, I'm saying I'm going to oppose large corporations.

They provide jobs.

And second, it was a better way of dealing with it than determining the severity of the musketeers.

I think I was supporting your point, saying that at the time you put it in, for the very purposes that you were saying.

could well be, when it's first in effect, would be a heritage adverse to the business, although, and therefore, we may be releasing some funds.

And that gives us an option to go the other way.

Well, let's don't get to something else.

Well, let's don't.

Yeah, we can look into it later.

A point that we have to have in mind, we know we can't control what happens to the economy and the parents of the women.

Although it came out recently, well, it was there in 1972.

It was not very well in 1970.

But we should have mine.

But we're looking at it.

that we may have to provide some more expansion.

Of course, there are other purposes.

So we need to be as severe and take a little bit more heat now.

Not be severe, but not so.

Well, you know, I just look back.

I look back speaking quite candidly to what we did in 1969.

I think we turned it too far.

I don't know.

I don't know whether...

I think Arthur agrees with that.

I don't know whether Arthur agrees or not.

But I think...

And when I say we did, we, of course, in our budget policy, you know, just turned it completely around.

It was a hell of a turn, right?

And in terms of the Fed, they turned it around from a very expansionary policy to a squeeze.

And that squeeze paid off.

By the way, I don't know.

Herb pointed out in his speech, and it's true, that this was the final recession.

We want to use that term, and everybody does, so we will.

We've had, you know, some close work.

Certainly a lot milder even in 1961.

So with this in mind, I, maybe I'm wrong in judging what we did in 69, which certainly meant that we got the low point in 70.

I just don't want to see the same thing happen this time.

I realize the factors are very different.

In 1969, up until June, the economy was at 4.3.2.

In fact, the unemployment rate, if you remember, in the first six months of our administration went down.

It wasn't because of what we did.

It was because of what we inherited.

And then we were already cool with it.

We cooled it on the Bucky side, and Majesty Martin, if you remember, cooled it like hell on the other side, and kept it cool.

In fact, the money supply was desired to fall flat throughout the year 1969, through until when it started moving out the window.

Is that what you're saying?

Well...

You went there.

In August, I think, of 69, for the meeting we had in the cabin with you and Mr. Clark.

Yeah.

How are you doing with that?

Well, it hurt.

I would hope that all of you, your people, must watch these.

I just, I know it's so easy to respond to the worries of Wall Street about this and that and the other thing and so forth and so on.

And then I hang on to her situation and do things which are right, but I thought it's just for the marketer's sake, for the marketer's sake, about the tree to keep the hell out of us of their own kind.

And we've done that too often.

We did.

I remember the 54 recession, the 58, and the 64.

And the second thing, on 72, we did very well.

That was perhaps, perhaps all I had to do to be a great friend of this group.

I think this time, let's watch and see if we just don't kick ourselves in the tail too hard in 72.

This is, I keep on telling my people, enter the phase where you're capable of being really serious about something.

Because, I'm talking about monetary policy.

Yeah.

Well, you know, everyone in our system wants to tighten screws.

I've been meeting that.

Right.

But, all right, you know, it's not over to us.

The directors of the danger zone right now.

We have seen everybody in the Federal Reserve, I understand, that with a bump, that rather minuscule mentality of the air commander will tighten the screws, because they aren't seen as you are in the long term, but tightening the screws is...

is something that we would like to know.

I don't want to do it.

Don't go too far.

What you're doing, I know, is saying it had occurred, but you may have started to lead the curve again, and you did before.

I know these faults, and you know them, too.

And they said, well, we've got to take care of it.

And of course, as far as the bank is concerned, not that this would ever enter into their calculations, but they make money out of higher interest rates and recession.

Maybe not recession, but higher interest rates.

They never had as good as they had in the 70s.

They were really on high hogs.

The bankers get after me for putting out the squeeze on the front right.

And I talk to them privately for some long hours.

I give them some unpublished information.

This is not a public record, but I have it.

Okay, when it shows.

You look at profits of our corporate system.

And these published figures aren't worth a damn.

Make some adjustments and first take out the profits of the Federal Reserve.

They're going to be long back, but they're worth a bit.

Second, take out the profits of subsidiaries of American corporations abroad that they have.

Next, take out the profits of financial institutions.

And then what you've got left is profits of domestic non-financial business.

Manufacturing, mining, construction, trade and investment, et cetera.

I really don't know.

Now, when you look at those profit figures, which mine is, the profits in 1972 were a good year, or lower than in 1966, a period during which the gross national product rose by over $400 billion.

Well, now, next let's look at the commercial banks separately.

The profits of commercial banks in 1972 were 50% higher than in 1966.

So they've got nothing to cry about.

But that was something that pertains at least to the big ones.

The profits of commercial banks in 72 would have been much less were it not their international operation.

That's where they made it.

They had a very important American business.

commercial, and then to report domestic business separately, it would have looked like a terrible year for commercial banks, those that have important foreign operations.

They made it overseas in 72, particularly.

71 is pretty well too.

Well, usually there was a romance, and the advance promise came in 1966 to 97.

That's when we got it.

You say the profits, in other words, the profits of the business, and it's narrowly defined area, but it's not narrowly defined.

It's probably a binary network.

I think we're not all that good.

I'm saying, though, as we have been, I'm saying to you, Mr. President, that as far as the profits of American corporate enterprise goes, profits are dangerous, you know.

It's a very significant observation, I would say.

This in turn gives rise to all kinds of other problems with the minimum amount of profit.

It leads to a minimum amount of investment.

We need a new plant, and therefore productivity.

Minimum investment in new technology, and therefore productivity.

The key to progress and the ability to compete, the whole thing in the world.

This observation has a lot to do with why I can't relate to the United States in general.

We have spoken about it.

I haven't.

very classifying point, get Artie's figures.

Because we've got to look at the long-range competitive position of the American economy.

And Paul can go around the negative figures and so forth.

Artie and I get a dependent dollar.

We can say Americans ought to export more.

But the final analysis, unless the American, with our high wage rates, unless the American...

The Dutch economy continues to reinvest, continues to provide the methods for higher productivity and so forth.

We've lost the ballgame.

Wasn't that true?

Well, the changes in exchange rate has tended to shift this profitability picture for a long time, and that's why those other countries don't make it for no reason.

We might have profits, and it certainly helps us a little bit.

Mr. President, I want to underline your response.

Only important observation.

Our objective in this country should be to have private enterprise so wealthy, with a profit system working so well, that American capitalists, instead of looking for a real master's abroad, could agree more.

And farmers would be bringing their capital here.

Mr. President, on the international side, that's a good point.

I'd like to discuss that particular point separately.

We need some time here.

And I suppose it might be a very good point to have discussed just so that other people could get the feel of it.

I was thinking, George, it would have to be

You should hear this.

You know, you get the Secretary of Commerce, the Secretary of Labor, and all these other people, and presented it, and let's have a broad picture of them.

Would I have you at that stage get a little discussion of what some of the things are that might be done to tell the situation?

A broad-based, a broad-based thing.

You could not participate.

You could be there to get me.

I think that's a legitimate thing.

I think that's a, let me say that it's not only, well, it's for me very fascinating, but for me it's enormously important because we can sit here and say, gee, the United States is the lowest rate of inflation in the industrial world and the lowest in the major countries.

The United States, we're doing very well, and God knows that this is the best market in the world.

But if beneath, if beneath there is that little tumor, now benign, that could become, shall we say, very malignant, we damn well better cut it off now.

That's the thing that I'm concerned about.

Because we, to all these trends, like we talked about beneath, it's an issue for me to find out what happened.

In 1969 and 70, really, the mistake was made in 65.

One of the things we've been doing in foreign policy is that we take the long view.

We started the China Initiative really in 1967 when I started talking about it.

that we were thinking the same way that we met when we started in 69.

It didn't come on until 72.

The Soviet initiative took four years to bring up, three and a half years of constant talk.

But we knew what we were going to do in both fields long before.

And I think that sometimes here, we may, that's why I like the idea of the budget in 74, 75.

And I think if we had looked at this business of productivity and profits and so forth, maybe we need to

I hope they can do a lot of it.

I think we need to get rid of it.

The tax thing, which could not be sold right now, which feels much better.

But let's get it around.

It's a very important subject.

All right, let's go to it.

Go ahead, Joe.

Let's go to the part that I don't understand, except all over.

We might give a brief description of what has happened and where we are, and then I can summarize some of our...

thinking and then there are a couple of developments, particularly your letter from Mr. Brandt, that I think suggests the direction of their thinking very strongly with Bowman and two persons who are not in the situation.

Well, very briefly, the situation, as I say, is that we made another exchange rate adjustment two weeks ago, which we thought was appropriate, which I think a lot of people thought was appropriate, and basically,

and the exchange rates and what everybody receives, I think, is a better, longer-term realignment.

But in the process, we ran into a little problem.

This is not part of the unexpected, that you can't devalue all the place in three years without a certain psychology, and creating doubts in many people's minds about what's going to happen next.

and the one that sent the other way for three weeks and finally went in the wild speculative direction.

In other words, we were responsible for that to an extent.

Well, I think... By creating a lot of confidence in our own... We were forced to make an exchange rate change of a sizable amount over the past two years, looking at both of them together.

And the United States changing its exchange rate is unsettling psychologically.

I don't think we can get around that, however necessary.

And we see some of the results of this.

We've done a few things, changing the discount rate.

People are reassuring the state that they want quite enough to stabilize the psychology.

So we have a peculiar situation where everybody basically, most people think the exchange rates are basically much sounder or lighter, but the nervous speculator is out to pick out any weak spot here or there, and he runs to the traditional havens.

The Swiss franc has been strong for so many years that the Swiss franc is the same thing into the mark, the same thing into gold.

So you now are forced to the point of decision

And I think there are two possible courses here in most general terms that we can go and, in fact, complete the transition which is half there toward voting rights, at least as an interim measure, at the least as an interim kind of measure by the major European countries that are now fixed moving in that direction, together or separately.

Or I think potentially

one could get together with those countries and decide to stabilize these rates and hold them where they're concerned after for an indefinite period.

This could be done if people wanted to do it.

And the two actions have different implications and different risks of the sort.

Judge, I think you can tell there's a risk-wise direction, but assigning probability to it is difficult, because we're in an unknown territory we haven't been in for many, many years anyway.

I've just frozen comments as I see them.

First of all, I think we should say a grant letter suggests the Europeans have performed to their meeting.

We have thought the Europeans really are in a mood where they think of clothing as their first option.

I think this is the first time they've been in this mood.

Not necessarily happily, but they, for one reason or another,

I'm trying to think that's the primary direction we should go.

Now, the question that arises there, I think, are two in my judgment.

Whether, given the upset state of our psychology, these folks will be smooth and stabilizing, or whether...

The market will take it as another indication of kind of official weakness and be able to graphically exchange rate if you can and push it all over too wide a spectrum of fluctuation and kind of undermine confidence in the whole system, which is already so over here in the market.

And maybe feedback on domestic confidence.

In one sense, it leaves all our options open, I think, for future reform.

In another sense, by leaving the European options open, too, it creates opportunities for others to try to oppose their view out of a messy situation.

So it's very fluid.

both in the sense of the immediate market responses and its effects on financial confidence around the world and its potential for long-term economic reform, monetary reform.

If it worked out smoothly, if you had smooth lobes, that would be fine.

I mean, our interest is basically that

that says this is inherently a bad action.

But you can't be sure of that, because so much is going on with our market psychology.

Now, we can, I think, in the open, of course, just make a dramatic gesture.

A lot of gestures that we can make, but I'm not going to put money behind it.

I don't want to be a big financialist.

But we can make a dramatic show against the speculators.

And I think when, in the short run, the question is whether we have given apostatists a fortune in the future by dedicating ourselves to this particular rape structure, but in a way that will give us problems a year from now.

What is your reaction?

Well, let me...

from the group discussions we've had, one, there's a general view that there's nothing wrong with present exchange rate of relationships.

Two, there is a general view that if any intervention is contemplated, it would have to be absolutely fallout.

We're going to win, and there's no doubt about it.

We're one of the sources there are into it.

There's no point in kind of fiddling around the edges of it in the way that we have done on at least one earlier occasion.

I'd like to agree.

Well, you have to be prepared to go 1, 2, 5, 10.

You have to be prepared to say, we will put up the money needed to do the job and then proceed on that basis.

And there is a kind of irony to that, I suppose, in that if people are convinced that that is the attitude you have, it may be that you don't have to spend very much money on it.

It's sort of like a run on a bank, and the banker that puts his money in the front window and says, come on and get it, I've got money, puts out the run, passing it to somebody who's got a piece of him.

I'm sure it's like that.

Don't let the poker game kill you.

You're sitting there.

The guy, he'll call you.

Yes, sir.

If you've got a hell of a lot of chips and so forth, then you can go in and if you've got enough to go all out, you're running right off.

But he doesn't think you might use it.

He'll call you every time.

Same thing.

We would, however, be...

be running a risk if there were exchange rate changes after we acquired marks by borrowing.

We acquired them on tariffs that had us bearing an exchange rate risk.

And I think that the furthest anyone in our group has been willing to go is to say we should engage in a process of borrowing marks in order to intervene with them

only if we assume no exchange rate risk in effect.

So that is a different version of intervention, whether that would be acceptable to the Germans is a question that might or might not be able to depend upon how desperately they wanted us to take that position.

Let me ask a question.

What are the Germans in effect asking?

They're asking us to take the second option.

Is that correct?

Well, I'm curious.

They haven't met.

Mr. Brandt, he met the night before last in various states, and you have this letter.

I don't know whether you've seen it or not, Mr. Brandt, but I think the key words are on the table.

Every conceivable effort to find a way out as a European solution.

So I think that it's very clear, I talked to Tony Barber this morning, that what they're seeking is a method of working out some kind of a joint flow.

Now, our view is that that's difficult for them to do.

And no doubt Mr. Brown is trying to persuade Heath to lock the pound in with the bar in some fixed relationship.

And he was very reluctant to do that and to assume, just within Europe, the costs of the intervention and so on, which, as you remember his discussion, he feels very pleased with himself for having closed and not having to lose reserves.

Now, Barber, this morning, told me that he's going to this meeting tomorrow.

He says there are no working papers.

He is not going to get himself in a position where either through the spending of British Reserve or borrowing, he incurs a lot of costs.

Now, I think what that adds up to is that a European float will be a rather restrictive one and difficult for them to bring off.

But that's the course they're on right now.

And they just restructure that way.

You can have two kinds of European floats.

You can have a joint float.

where their currencies are tied together rigidly, more or less rigidly, and they float against the double, or each in the wall, lines, right?

Several of them, perhaps, each are rigid.

And I think what you're deciding is that a common motor would be very difficult to carry on.

It should be very difficult.

But Germany...

But it's a common quote.

You mean a joint quote?

It's a joint quote.

By a joint quote, you mean one where they all come together?

It's easier for them to do it because Italy are allowed to be separate.

They must be included.

But it's still a difficult...

It would be difficult...

It would be difficult really even for the four with Frank in one position and the German one in another.

That's what they seem to think.

Why would they like to do that?

half ideology and half real economics.

So they want to be able to hang together and show their unity and push their unity.

And the other part of it is they are fighting to facilitate one of their exchange rates out of line with each other, because that's where most of their trade is.

And they don't want to take them more down.

As we see, as I see it,

way in which the system has unfolded since August 71.

In effect, we have been moving toward more flexibility in the exchange rate system.

And leaving aside the amount of changes in the exchange rates, there has been a great increase in the flexibility of the system.

And we now have

the Japanese smuggling, the British smuggling, the Italian smuggling, the Swiss smuggling, the Canadians smuggling.

So I suppose it must be true that one reason for the pressure against those who aren't smuggling is that that's sort of the only pressure point there is, and they become more isolated to this degree.

But is it?

Just to answer.

Isn't it really the interest of nations that float and have some that don't?

I mean, what the hell does it do them to float?

You see what I mean?

I would think the British and Canadians from London, as far as in relation to the U.S., right?

Well, some...

They wouldn't want to float.

Do they want to float?

A currency.

We're, in a sense, in a position, unless we engage in intervention, where...

We're floating as far as we're concerned, and we're not, actually, with respect to the mark, only because the Germans intervened somehow.

These smaller countries like a big stable unit against which they can operate, and the more people that are fixed while they're floating, the better they like it.

the europeans are doing their trading primarily with one another it's their trade with one another that constantly angry rather than trade with the u.s trade with the u.s is a small part relative to their trade if they had a joint bloat

They would have stable exchange rates with their major trading European partners.

And they would be able to have achieved stability.

And the exchange rate with the U.S. would vary from one another where it counts most exchange rates would be stable.

I think that's the way the Europeans look at it.

Well, I think from our standpoint, to the extent that we think that a flexible system is a desirable thing to have, in some ways you can say we're almost there.

And if they were able to have a successful modified joint float of some kind, we would be there.

And we should...

Well, we can sit back and view it this way and say, well, fine, they're working on it, let them work on it.

But that raises the problem as a whole.

That raises the risk there.

Is the psychological one, and maybe we just don't care that much about things, and they're not going to exert full leadership, end quote, to bring stability to the world's major economies and brains.

Is that the argument?

economic and monetary risk of this kind of political risk that it could be said the United States didn't care and things go to hell.

The economic risk is that, in fact, traders are so nervous and they're pretty well shaken up that they can't take this much flexibility this quickly.

And you get gyrations in exchange rates that really don't make much sense and do damage economic and political relationships.

very hard to predict whether... How they'll react.

How they'll react.

Will they react in a stable or in a non-stable way?

The probability of, let's say, some modified joint flow, which falls apart, that would be kind of a further deterioration.

It would be better if they surely did something that could last and didn't hold their currency together so tightly.

They're determined to try to do that.

Mr. Hayes, the head of the New York Federal Reserve, called yesterday urging that we take this course of domestic intervention as his view, and he said that he was reflecting the views of New York financiers, a range of them.

We have some that do not agree with that, but anyway, that is it.

what we might do.

I think that if we were to decide on a massive intervention technique, the question of whether or not we could at this point persuade the Germans to go along, they're going down the other track.

But I think, probably so, from our statement at the time of the evaluation,

But they don't regard this as a real option.

They think that we have probably foreclosed this option and are not considering it.

What, just looking at the option, what would the British do?

What would the French do?

The French would probably like it.

They'd like the idea of a relatively fixed exchange rate.

How about the British?

The British, they're floating, and they'd be content to see us do it.

I think that he might think that we're wasting a lot of money.

He's not willing to waste any.

I think they'd be delighted to the very reason you suggested that it's supposed to get off their back.

I don't know.

They are people who are minded for orderliness, and I suppose they would probably wish their way.

Yes, they are alleged to be very heavy speculators in this game themselves.

So that's true, I'm not sure.

I never questioned her, I haven't.

Right.

Why do the New York bankers expressing themselves through the fed that listens to their dispatch?

Because if they get saved, they may go across this.

Well, you know, if they like it, they will.

I mean, there is a certain sense.

Let me ask this question.

I think Paul's thoughts.

discussion in the short and long term.

Let's suppose we did go with, of course, a massive intervention.

I think the Germans would roll.

I know nothing about the financial side, but I think that Brown, from a political standpoint, would roll.

Nevertheless, we have ways to talk to Brown.

Brown will not stand against us if we decide

This is the way we're gonna go.

I don't think we should go that way, unless he was pretty enthusiastic about it.

Right.

Because he's gonna take most of the, carry most of the cane out.

Right.

We would have to work that out, okay.

Now, having done that, does that then destroy the option of working out

at a later time, a new work world monetary system that has more flexibility, etc.

What would concern me about your decision, talking about this option, is to say, well, it'd be good for a while, then we'd have another one next year.

I think what is...

speaking yesterday, I want to observe these things, and obviously you know very little about it, but the thing that concerns me about it is that the goddamn crises come one year, two years, so forth, so we go on and on and on and on.

So we had Smithsonian, and we thought, well, now we've got the thing settled for a while.

So it was settled for a little while, and then off to something else, and another, and another.

And I think that

even a bad stable program is better than a good unstable one.

Now, here I argue against the general proposition that, you know, which, you know, doesn't frame the view.

I would suggest that, well, here we are, why do we get battered around, and why do we react to everything that's done internationally?

We must just look and just go, well,

The point that, I guess, from a foreign policy standpoint is to get that in.

That if we could make, if we could exert what we call leadership, and if it worked now, but then if we could go from there to something else later, that would create a more stable situation.

That option would have to be considered a dip on the other hand.

Exerting leadership now means only that, well, we bought off this problem.

Within a year from now, we may have it again.

And that's the thing that concerns me about this dip.

And the other thing is that I don't want the dollar to us in this country to be in a position again

where we always take the heat in other words that's why the whole business of comparability concerns all the arguments about gold and all that sort of thing but we just can't have the american domestic economy constantly hostage to the manipulations of international monetary situation so you see i have a mixed feeling about this from a political standpoint internationally

I would much rather exert the leadership, you know, and create some stability and see that our friends abroad and so forth play the game.

From the standpoint of the domestic situation, I'd rather see that we not be hostage to these things abroad.

So, and then, let me just complete the circle.

On the other hand, I would hate to be here eight years in this office.

without having done something about a more stable system.

In other words, maybe there is a need for a new, what do you call it, a brand new list.

It seems to me that we took the leadership last September to say we have this vision of a better system, a system in which there is flexibility and rules.

rules covering inflexibility, and we have made it a condition of our later entering into more responsibility for the maintenance of our power value that it should be done as part of the general system of rules which apply as much as everybody else does.

And the thing that we have to avoid now is the community getting back into a de facto resumption of these old obligations.

And we have this crisis without having made any progress towards this ultimate system.

And I think our chances of getting to the ultimate system is better if we go through this float than if we buy it and now realize that it brings a break.

I'd like to put it the opposite way.

that we should decide to intervene to stabilize the foreign exchange market, which I think we can do, and we can make the speculator run the cover.

The great risk is, as Paul indicated, we're going to have a labor crisis three months later, six months later, if we go to the root of the intervention.

A second component of that route would have to be a joint declaration by the heads of state that we would establish rules in the new international monetary system rather promptly.

And let us say three months, and that can be done.

You know these conversations that are going forward in Ireland.

Yeah, they're leisurely.

Nobody wants to, who knows how to do them.

On the other hand, you can just sit down and hammer this thing out if the will is there.

So he decided to intervene, that second component of the dissension, to take care of the long-term problem.

And you can take, look, you can take 30 years, you can take three years, you can take three months to do the job.

Well, I agree with Arthur that it's important to work on this policy reform, work on it hard, and we have been doing that.

We have been using these periodic crises as a way to highlight the importance of doing that.

We haven't gotten enough cooperation from the others.

No, we are not the foot-dragger here at all.

No, we have been the most forthcoming, the most constructive, the most demanding.

Well, but we addressed the major problems, the choice.

I would understand, I would gather from your previous positions, you would have tended to, shall we say, love the best.

I think that's right.

You would not agree with her.

particularly since we're not being invited to, so to speak.

And I agree with Arthur that if we were to do it, it should be on the underlying kind of risk conditions he specified.

With the Germans having decided on a different route, we could get those conditions.

But in any case, I think I would be inclined to let the test happen.

I would agree with that, with some application of what Kurt has said.

I think that the problem of getting to from no float to float is what we're right in now, or let's say no float to flexibility.

But once we do persist in going toward that greater flexibility, then the very kind of problems that we're talking about won't be as big as they are now.

We're in the transitional phase of a fixed set of relationships

to a more flexible one, and we've got to get over the transition and get there, and if we persist in not getting through it, then I think that we won't get to the ultimate different kind of stability that there will exist when we get into the position of greater flexibility.

It's a matter of getting across that transition, and if we now intervene in a massive way, we're once again, well, not quite in a massive transition.

Let me ask another question.

uh failing to intervene in a massive way uh does that uh mean that we do not think that we just continue to have this uh this filibustering that we're turning into yeah yeah i mean i'm just glad to see the words of the long-term situation uh i

But on the other hand, in terms of the long-term, looking at the long-term situation, don't we want to work on a better system?

We do.

We propose one.

But what our first argument, I think, is to give them a shot.

And that'll get them off their butts so that they work with us.

I think it's worth it in a way.

I think that for us to intervene presents them with a shock.

And to let them float is their shock.

And I think that Brian and Larry could do a great opportunity to say, well, we understand the circumstances.

to complete you to the European solution, but I think we all agree that this is not a permanent mistake, which we'd like to be.

We want a world solution, and we want to work on it in Georgia, come to Europe, and we're all here to help.

Either way, I think you've got a difficult political problem here, which gets bogged down in the monetary system and so on and so forth.

The pessimistic view of this, the danger that we have to go against is the so-called European solution.

there will be one view with Europe, namely the French view, that will make that, to a greater or lesser degree, quite antagonistic.

And the European solution is a euphemism for saying, let's leave the United States out of the world and go our independent course.

Now, that is not a uniform view with Europe, but to the extent that you get kind of a chaotic feeling here and that the United States hasn't given a damn, you tend to maximize

That views bargaining leverage, which is bad for the kind of .

This is the way in which Europe is moving.

Yeah, sure.

You know, that's not the only view in Europe, but I think the danger is you give support to that view.

It can be pushed that way, and that's why the way we handle this is pretty good.

In other words, your point is that the...

The French will try to put it that way, I'm quite sure.

Now, of course, against that, you've got the fact that Britain and others have, you know, kind of put this forward as their preferred choice, as you say, or as opposed to your preferred choice for the moment.

Now, let's get together on the general rules for the system, and don't...

to walk by yourself politically and economically no longer, and you've got to play with those forces as against the Frenchman forces.

Look this forward as their preferred choice, either because it is actually their preferred choice, or because they have been going on the assumption, which we have encouraged, that the U.S. is not going to intervene, and they're just not considering that.

I think that's out of the question.

I think there is some evidence that the Germans are less staunch and kind of a cooperative role with us than they were.

They feel very seriously squeezed between the United States and France, and they're going to have to deal with the politicians now in Georgia, particularly Schenker.

I don't want to compromise that, but that's more on the French side now than it needs to be faced.

I agree with that.

That was something that we could see.

despite the fact that three, four weeks ago, we took the initiative.

We did something that bailed them out of a serious political problem that they've gotten themselves into, and reconstructed the situation with the devaluations and with the pressure on the Japanese that on hold was a beautiful solution from their standpoint.

It was politically, it was designed politically to bring up this battle, and it did.

I could see it was very much in their interest, and yet...

I'm sorry, I'm sorry.

This is psychological.

The, uh... Sure.

Our solution was to...

And they recognized that.

But underlying it all, they had come to view the U.S. as the locus of unsettling forces in the monetary world for years.

They had to rely on the U.S. and they had to work out their own problems.

And to expand a little on what Paul said,

I think that there is a fair chance, I don't know how to evaluate this probability, that the Europeans may now move to construct a new monetary system of their own.

If the French were in a stronger position than we are, I would bet on that.

It's a little uncertain whether they can carry on.

If they do, here it is, and then the U.S., well, it was a conjoinment that we wanted, and our leadership would be gone.

I want to talk a little about the politics of this as well as the economics.

To me, a floating world is not a good world from an economic point of view.

Economically, economically.

Let me talk about the politics of this.

And here is the position of the U.S. We carried off this consignment agreement.

Now it's regarded generally as a failure.

We worked on a new arrangement, and now it's a failure.

Then the Europeans go off on their own, and we're on the sidelines.

And where they will go will be mentioned, I don't know.

Politically, I think we're in a very good position.

And I must say, I must say, I don't like it.

From an economic point of view, you know, just think of a...

Think of...

Swiss businessman at the present time with the Swiss franc oscillating, appreciating 23% against the downed euro.

Now I want to say to you and all Canada's president that I carried out a survey yesterday, a quick survey of business economists and businessmen around the country.

And uneasiness fucked the degree of concern that I feel

I have not found among others.

That's true, if you want to know that.

But I want you to know something else.

I've worked with these businessmen and these business economists for more years than I care to remember.

And I have found businessmen and business economists to be very poor as a group in judging trends.

They're always late in sensing the situation.

And I think this is a negative factor as far as the domestic economy is concerned and as far as the international economy is concerned.

However, current forces in the economy, expansion of the forces are so strong that we probably will be able to take this in stride.

But over the longer run, I would expect deterioration.

And ask yourself this question.

How do you get back to a stable system of priorities if this is what you want?

And I think we will want that because the experiment is not going to work.

It will cause political frictions.

It will cause all kinds of controls that spring up.

How do you work back to a new system of parity?

Here's a given government.

It wants to settle on a new parity.

It doesn't know how to settle on a new parity because it doesn't know what other countries are going to do.

It's very difficult to work back.

On the other hand, the other part of the argument is that we're halfway there.

We're halfway there already.

And it would be difficult to show this.

If I felt a little more strongly than I do, I would say, let's go in on a massive scale and take sizable exchange risks.

I'm not prepared to work on that.

The only exchange risk I'm not prepared to recommend is risk against devaluation because of the position you've taken.

You don't want another devaluation?

You're not going to take it?

I don't recommend it.

All right, so I don't think we're taking much of a risk in terms of dollars.

Sure, what we do is to borrow, but assuming we have no further devaluation, it will not cost us one dollar.

Let me ask you a question, George.

Sure.

Suppose that I determine...

And not so much a domestic political standpoint, but from an international political standpoint, that we ought to take a positive leadership role in this time.

How do you feel about that?

If that consideration, which I, of course, have to judge, if that consideration has to, I was going to put the term British, you know, to other people, the shape of Europe, how we deal with Europe, et cetera, et cetera, et cetera.

Would you still say, I'll go?

Well, I think you're in the best position to make a constellation of factors.

whether that would be the judgment.

But I'd just like to know, as we consider that side of it, how strong, whether the economic factors, which you're basing your judgment on, are so strong that we all say, no, we must go the other way.

Well, I think that, in other words, could you,

Could you support the other one?

I mean, could you make an argument for it?

You could.

Well, yes, you could make an argument for it.

We think that the rates that have been established are approximately right.

And we think that this is a speculative disruption based on uncertainty about the ability of governments to defend these rates.

And we're going to show them

We are able.

Let me answer that, of course, against that.

We've said that is by way of saying, well, we give up on the idea of a more flexible system and we need to have a...

I think that you can have a system that is like the one we have, that has a rigid set of rights that are fixed and defended, and that can work, and it did work quite well, as long as we were a dominant economic power able to assert that and make a go of it.

I think that a flexible system can work.

We've tried to design something that is like a flexible system that has some of the reassurances in it of a power value system.

I think that can work.

I don't see how we have the muscle to so dominate the situation to make a real fixed rate system on the kind of cat in a post-war period really work.

Of course.

I am what you would like me to be.

I am what we need.

It's a flexible system.

It's that system that I have in order to accomplish what I want.

But even therefore, don't you think, don't you, don't you, wouldn't you agree, though, that coming in with this massive intervention, well, any kind of intervention at this time, is going to really very strongly reduce that option?

Well, yes.

All right.

That's my suggestion.

First of all, about the massive intervention.

By massive intervention, all that any one of us means is to be prepared to do it.

You know, in June of last year, we decided we would risk $2 billion.

The actual amount that we had to put up was around $30 million.

And that was enough to buy a market because we blew a trumpet and we indicated we were in the market.

to achieve stability, and we'll do it on whatever scale is necessary.

Now, if we intervene now, be prepared to do so on a massive scale, if necessary.

And if you, at the same time, can get an agreement to go to work on this promptly, not drag this thing out, on permanent reform, and try to sew it up within three months, then I think that we would get

have the leadership, and we have a good chance of working on a new system that could work all the years.

We don't have to take three years to do a new industry or whatever.

Well, I think that a great deal of incentive for the rest of the world to adopt something like the short-term plan.

would be lost once we had committed ourselves to this support.

And also, I'm not sure whether you're being offered an existent option, as whether there is a kind of free lunch here in the form of massive support by us, which does not provide any risk to us, because it implies somebody's going to take the risk.

It implies that the Germans are going to take the risk of a massive intervention, and I don't know whether that's an option that's available to us.

uh, to support, uh, on a massive scale without taking any risk, except one that we voluntarily accompanied for days, so by devaluing, except we're not going to do.

So, uh, that's, that's a question that's in the picture, also, whether the state needs to exist.

I think that's a fair statement, but there's only one way to find out, and that's to talk to other people if you haven't done it.

What do you think?

I don't think there's any question to make the convention option work.

We really need their enthusiastic desire for this.

I don't think it's something for us to press upon.

Let me ask you, let me ask you, is it, is it, is it really possible to talk to them?

Well, that's a different way that you can talk to them.

But certainly, I would say that on the massive intervention,

The only purpose of this, unless it's trying to

Let me just fold in a political thing.

We're getting into Europe now.

We've been in a very hell of a mood in the last few months about NATO and ADFR and the European Security Conference.

We're in watershed courage with regard to our relations to Europe.

Now, the problem with Europe is that Europe today, we've got to look at their psychology and leave out the economics.

Europeans are terribly frustrated.

because the Germans can't have an international policy.

They've been on full temper because they haven't been tolerant.

The French are parochial.

After they were kicked out of Algeria and Vietnam, they haven't.

The British take the world view only because they're British and have always thought big, and not just about Europe.

They have thought internationally rather than the Europeans.

But here they are, all of them now, forcing it, very alert to the left also in all these countries.

The Germans are already socialists, or at least how socialists we've become.

The French, again, will get one this weekend.

The Italians, of course, are being hit with the socialists.

The British would be if they had an election today, but unfortunately, the Labour government and Socialists are so kind and divided that he is the piece of the law and he stands on.

All right, looking at the messes in Europe, and it is a mess, in my opinion, politically, their concern are dealing a lot with Russia, which we're going to have to deal with.

I remember the meeting with the Russians later this year.

I'm trying to put the political factors into context here.

You have to realize that in Europe, you know, it's a little like he comes here.

He loves to talk about the Hoxha trip to China.

He likes to talk about the Russian arms and what we're going to do about the British side.

Of course he does.

And what's going to happen in the Middle East, what can we do?

But he knows as he talks to me.

that what the British do doesn't make a damn of a difference to the world.

It's too bad.

It's true.

What they do in Europe matters, but not in the world.

And he knows, too, that even if Europe united, which is, of course, the likelihood of 10, 15, 20 years from now, more political than it is today, that they aren't going to be a major factor because they're never going to have the domestic opinion to have the punch, crunch, power

And those are, in a sense, the major factors.

They know that what really matters is what, today, is what the U.S. funds us to Russia, and 10 years from now, what we may say to China, and so forth and so on.

So put yourself then in the position of Europeans.

There's going to be a great tendency for them now

to turn in to, and frankly, despite all the very nice things they say about the U.S. and all that state business and tip classes and all that stuff, all in all, despite all the personal relationships and so forth, there's a tendency for the Europeans to, frankly, come isolationist.

Now, this could jeopardize the NATO commitment on their part and a lot of other things.

I'm painting a black picture here, but I think, as I judge the European politician, except for he doesn't want to serve the world, you know, every day at one.

I mean, Brown doesn't understand anything.

He's a nice, pleasant face and all that sort of thing, but he's a dullard in terms, except as to Brown and the rest, he doesn't understand the world, he never will.

The Italians did 2,000 years ago, and they were finished, except for two years ago.

Anyway, you now come to the point that what stroke did we have with Europe?

And basically, I come down to the fact that when you talk to the Europeans, the major stroke we have today happens to be the steel.

Now we, it's very dangerous for us, basically because

Because we need a Europe that will maintain its military strength and so forth and its ties to us and not be a vision for Soviet and or socialist deterioration.

We need a Europe that will have reasons to be, say, close to the United States.

So therefore, I would have to judge any decision made here in terms of whether it will be interpreted by Europe as being why the U.S. doesn't care.

Now, maybe that...

So what I'd like to do is, if you fellows have the time, I'd like for you to...

run this by, not individually, don't hit one on my side, because you get on one side and you get on the other, but I'd like for him, for Kissinger to hear these arguments, if we could.

I'd like to give, if you could, if this group could spend an hour with him, if you did with me, just laying out the options.

And I will talk to him in the meantime, because we happen to be discussing Earth this weekend anyway.

I'm happy to be already...

Because I don't want to be in a position of making a decision on this, which is good economically.

I happen to tilt more to George's view that on the economic side, I tend to be very doubtful about...

frankly, what role the United States can play today because of the growing economies of the European Union.

But I could be wrong, Arthur could be right, but it's a matter of degree, because apparently we all are working toward the realization of George's speech at the IMF.

But on the other hand, as all of you have seen, sometimes you have to do things economically in the world that will contribute to your political leadership.

Uh, and it's that factor.

I don't know, I don't know, I don't know whether this is, whether it's that big or not, but I would like to run it by a decision, and I'm going to talk to you about it.

Of course, this is a very big inevitable political implication, Justin, and the only thing I think... You see, when you talk to the finance minister, George, and you talk to the banker, et cetera, or economists, uh, they will, you'll get only part of the picture, but we've got, we've got to get them up here, uh,

I've got to deal with the other side of it, too, as to whether anything we do here, whether at this point we're at a situation, at a place where the Europeans might feel, well, we can do that.

The French are absolutely perfectly the toughest people.

They take views and substance opposed to ours, but their main preoccupation, I'm sure, is this political one.

How to posture Europe vis-a-vis the United States politically.

Mr. President, on the question you've been trying to mention, if, let us say, we were to go any such route, there's only one country that we have to convince.

Germany.

That's how we will understand it.

Because the British will go anyway.

Well, that doesn't mean anything to them.

You see, the principle of it is... Oh, the principle of life, I don't know.

It's just... How soon do we have to answer the problem?

Well, they're meeting.

That's the next meeting.

The ministers are meeting tomorrow.

Oh, is it all scheduled?

You've got a little time that you could extend to see, to see Kissinger now.

And then I'll be available on an anniversary.

I don't know.

We don't have much, I suppose, to consider.

When we say intervention, I suppose it's fair to say that virtually everyone thinks intervention would have to be surrounded by some other actions.

type B or a dollar market through, for example, some treasury bar, for instance, or get other central banks to relook some money.

Maybe we want to somehow encourage corporations or others to stop speculating by using the controls we already have.

Those issues are going to arise.

I just don't like it.

This is an example of a business that can come in and we move right back to this business of control here.

You don't have to spend, spend, just spend 30 minutes if you could, if I can get Henry to take care of this.

Henry, uh,

We've got a major monetary matter we have to go over to all of Europe.

I'd like for you to spend 30 minutes with them and we have an answer in the letter from Ron.

If you do it now, they can come over.

They'll come over to you.

They can come to your office.

And I guess that's what's on this floor.

And they'll be right over.

And then after that, you and I will talk.

Okay?

Fine.

we'll give you overtime this week

Yeah.

I was a good soldier on that one.

Well, you've been a good soldier and everything.

We've got to find a better system, though, don't we?

President, sir.