Word: discount
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Dates: during 1920-1929
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...provided a large additional buying power without a corresponding increase in production. As has always taken place under similar circumstances in the past, inflation of credit and currency has resulted in inflation in prices. The Federal Reserve system has substantial merits; nevertheless, its operation, with low rates for re-discount of loans on government bonds, brought about inflation. Perhaps under war conditions this result could not wisely have been avoided. It such be the case, these high prices should be accepted as a necessary consequence...
...November, 1919, the Federal Reserve banks began to increase their rates of re-discount. Since January 23, 1920, the rates have been sufficiently high to check further inflation, temporary at least. Although its effect on commodity prices inevitably is manifested more slowly than its effect on the stock market, this increase in re-discount rates apparently has begun to exert some influence on commodity prices. It appears probable that within a few months commodity prices will start downwards toward a level that is more nearly normal. This will mean not only a relief to consumers, but also better labor relations...