Question: Do you feel there is a probability that interest rates will be rising now that the election is over?
Answer: Before the election, I attended a seminar given by the Alliance Bank, at which James Howell, professor of economics at Stanford University, was featured. Howell claimed that if either major political party should win the presidential election by a landslide, there would be an easing in interest rates and a steady fall in the value of the dollar. He predicted a fall in the dollar immediately after the election and a second one a few months after the election.
Howell said that interest rates are abnormally high as a result of:
1--The lenders' fear of inflation.
2--The Federal Reserve's tight-money program.
3--A boom in the economy with high demand.
4--The problems caused by deregulation of banks and other credit institutions.
Howell also predicted that the economy would be very strong through 1986, and that the continued recovery would result in great consumer participation, particularly in the area of housing.