Release No. 1102 Columbia Features, Inc. For release on or after 36 West 44th Street December 8, 1967 New York, N. Y. 10036 By LAWRENCE FERTIG WHY "FINE-TUNERS" WENT WRONG It all sounded so plausible. Many people believed it. The way to secure a steady. non-inflationary prosperity and strengthen free enterprise -- said apostles of the New Economics -- is to manipulate two controlling factors: (1) the total of federal spending and federal taxes, (2) the volume of newly-created money and bank-credit, which is controlled by the Federal Reserve Board. The New Economics asserted that Washington administrators could "fine-tune" the economy, thus avoid- ing the possibility of any crisis. It all sounded plausible, but there is no doubt that the New Economics is in difficulty now -- a difficulty severely compounded by the devaluation of the pound. Plainly Washington economists pressed the wrong buttons. Even before the devaluation there was talk in financial circles of a coming "money crunch". The words "financial crisis"have been prevalent in informed circles for some time. Despite the record flood of money and credit released by action of the Federal been Reserve there has/strong demand for more and still more funds. The situation today is a curious one. If we are to prevent the dollar from going the way of the pound then inflation must be definitely curbed. But the Fed hesitates to substantially cut the abundant flow of bank-credit which it has been creating at a record rate, especially because there is pressure on the U. S. economy due to sterling devaluation. On the other hand the Fed fears to continue its monetary inflation at the rate it has maintained this year. It would face the inevitable consequences -- runaway price increases, still higher interest rates and a demoralized capital market -- and finally an overwhelming threat to our gold supply and the dollar. A vital part of the problem is mounting federal deficits for the Great Society. It should be noted that for many years the New Economics derided the public's concern about spending and cumulative deficits. As Fed Chairman William McChesney Martin said, fiscal planners acted as if "deficits are good and budget surpluses are bad in themselves." So there was over-spending in good years as well as in bad. It was asserted that larger deficits would not be troublesome, and that they should be planned. Now we face the day of reckoning. There is an estimated federal deficit this year between $18 and $30 billion (its magnitude depends on Congress passing a surtax and the Executive cutting spending.) The U. S. Treasury must finance - more -