American Economy Responding To Needs; Not Inflation Oriented.

• Position: LIFE AND HEALTH

SAN FRANCISCO, Calif. -- Is the American economy "inflation-oriented"? The answer is "No", according to the president of the nation's seventh largest life insurance company.

Francis F. Ferguson, president of the Northwestern Mutual Life of Milwaukee, tangled head-on with popular misconceptions about inflation September 30 in his opening address to the 21st All Western Meeting of NMI, agents at the Fairmont Hotel. The two-day session has drawn more than 400 agents, wives and guests from eight western states.

"The current 4.3% annual rate of inflation is the price tag fighting two wars at once without being willing to increase taxes enough to pay for them," Ferguson said, "and we are fighting two wars--one in Vietnam and the other against poverty at home."

The inflation rale is "as temporary as the cause", in Ferguson's view, and "there are already mans signs of improvement in our economic stability." "As the ar in Vietnam terminates," he predicted, "we will return to a more normal price situation, and discover that this is not an inflation-oriented economy."

He predicted that the postwar influences will include "a large and growing labor force that will avert the labor shortages often responsible for abnormal inflation... the stimulating effect of intensive research and development ... increasing competition from imported products... and a general abundance of goods and services that does not argue for the levels of inflation we are now experiencing.

Under war pressures, the annual rate of inflation has jumped from less than to 2% to the 4% range during the last three years, he noted, Salesman for mutual funds and other equity-type investments have capitalized on this atmosphere to the extent that many people are now "over-hedged against inflation and under-hedged against...