INFLATION: $10,000,000,000 in Cash

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As Leon Henderson tussled with rebellious prices last week (see above), one thing that can nullify all his efforts got bigger than ever: money in the hands of the public ("in circulation") reached a record $9,899,000,000, 22% above a year ago, more than double 1929. Moreover, the big demand for cash over the Labor Day holiday was sure to push it over the $10,000,000,000 mark.

After toying with the idea for years, Federal Reserve Board officials last week started a why-is-it probe to try to find the reason for this unexplained growth of cash in use. Meanwhile, private bankers made some guesses: 1) with income rising many a U.S. citizen is stuffing excess cash into mattresses, caching it in backyards, carrying it on the hip; 2) foreigners have been hoarding big bills ($50 and up); 3) the relative use of checking accounts has declined because of service charges.

As far as Henderson's problem is concerned, the more cash people hide in mattresses the better. But if they decided to spend it all at once, his problem would be worse than ever.