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One man's misfortune

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Nelson Bunker Hunt of Dallas is said to have lost something around or over $ 100 million in his venture into the silver market. Market experts say that smaller investors who went into silver late in the story are the ones who need sympathy. Mr. Hunt, they think, can take care of himself.

I do not suppose that it will be any consolation either to Mr. Hunt or to those perhaps more deserving smaller investors to say that their misfortune was a gain for others, but it just might be the best thing that has happened to the American economy in a long time.

Their loss proves one thing. Not all prices are going to go up for all time.

Silver is a case where prices went up and up until a lot of investors thought there was no end to it. And that assumption applied to other commodities. A lot of prices seemed to have nowhere to go except up. And so people bought on the assumption that whatever they wanted or needed would cost more tomorrow than it costs today.

And that is precisely what causes inflation to get out of hand.

It is called the psychological factor. It is the hardest thing for a government to get a hold on and do something about when that government decides that it must try to bring the inflation under control. It has so far frustrated every effort by three Presidents since the present inflation in the United States first became a dangerous problem.

Richard Nixon tried to deal with it. He even went over to wage and price controls in spite of a strong personal distaste for that device. But he and his advisers underestimated the momentum provided by the "psychological factor." They took the lid off too soon.

Gerald Ford tried to deal with it, and had some moderate success. But he failed to persuade US labor and management that prices might come down instead of continuing to go up. They continued to creep upwards, not alarmingly, but steadily, over his brief presidency.

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