The Squeeze of '79

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That attitude must be dislodged if inflation's grip on the economy is ever to be broken. At a Business Council meeting of 100 corporate chiefs in Hot Springs, Va., last week, Du Pont Chairman Irving Shapiro strongly endorsed the Federal Reserve's tough new tactics to halt the price spiral: "The sooner we suffer the pain, the sooner we will be through it all." Added General Electric Chairman Reginald Jones, with biblical solemnity: "We have to go through the valley of despair. There will be several months of pain and disruption."

As the 1980 campaign intensifies, so will the political pressure on Jimmy Carter to keep unemployment from climbing and the recession from deepening, either by calling for a quickie tax cut or by pumping up the economy with an inflationary jolt of deficit spending. But at his press conference last week, the President insisted he would not be swayed: "Whatever it takes to control inflation, that's what I will do."

Treasury Secretary Miller, along with Volcker, traveled to Hot Springs to endorse the Federal Reserve's actions and to repeat Carter's pledge before the Business Council. Said Miller: "The President is supportive of these actions, because he is determined to carry on the war against inflation." In fact, all eyes were instead on the quiet-spoken Volcker. With no fanfare but with steely determination, he had brought monetary policymaking fully into the fight to hold down prices. In so doing, the new Federal Reserve chief was offering the first genuine hope of the Carter Administration that someone might have both a will and a way to deal with the inflation menace.