Freeman

ARTICLE

Interest Rate Control

MARCH 01, 1961 by H.P.B. JENKINS

Economist at Fayetteville, Arkansas

It was a day in early spring
At story-telling time.
Old Kaspar chewed a dead cigar
and sipped his rum-and-lime,
While Peterkin and Wilhelmine
Looked at the television screen.

They saw a giant printing press
Behind a guarded door
And heaps of crispy dollar bills
Upon the marble floor,
Where men were piling them in stacks
Or stuffing them in plastic sacks.

"Is that a counterfeiting gang?"
The little children cried.
"It’s called the Interest Rate Control,"
Old Kaspar soon replied.
"That printing press, the Planners say,
Will drive the interest rates away."

"What sort of harm," asked Wilhelmine,
"Can rates of interest do?"
"It’s said they strangle business growth,
And strain the budget, too.
They always grow and multiply
Where cash is kept in tight supply."

"There was a time," Old Kaspar said,
"When loans on easy terms
Were all reserved for prudent folks
Or wisely managed firms.
But now a loan is guaranteed
To anyone who shows a need."

"It seems a very helpful change,"
Breathed little Wilhelmine.
"One bad effect," Old Kaspar sighed,
"Was wholly unforeseen.
Inflated prices cost us more
Than interest burdens did before."

ASSOCIATED ISSUE

March 1961

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Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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