THE NEW CHAIRMAN of the Federal Reserve Board, G. William Miller, thinks that the tax cut in the current bill is just about the right size. But, as he told the Senate Finance Committee the other day, he'd like to see it distributed differently. He favors postponing the January increase in the Social Security taxes. He also believes that Congress ought to pass the natural-gas bill. And, as he said a couple of weeks ago in an interview with The Wall Street Journal, he likes the idea of an excess-profits tax to combat inflation. He further thinks that wage and price guidelines are needed. Moreover, as he had frequently reiterated throughout the summer, he hopes that interest rates will peak by the end of the year and then decline.
To be blunt, Mr. Miller is talking too much. His open and informal manner is highly appealing, and if he were in another office - if he were, say, a senator - it would be an unalloyed virtue. But he is, in fact, chairman of the Fed, with vast influence over present and future monetary policy here and throughout the world. Every word that he utters is recorded, pored over the endlessly analyzed for hints, intentional or otherwise, of the Fed's next moves.
Mr. Miller's commentary on this wide variety of economic subjects is not having the effect that Mr. Miller presumably intends. No doubt he means to convey an air of confidence, and to illustrate the unity between his office and the Carter administration. The White House has stopped complaining about high interest rates, and Mr. Miller is returning the compliment by supporting the president on taxes. But to the edgy and suspicious people in the money markets, Mr. Miller's words are capable of other interpretations. The references to interest rates' peaking in the next few months can be taken to suggest that the United States will not use monetary policy - that is, higher interest - to combat inflation. The repeated suggestions about tax changes are construed to mean that the monetary authorities have not made up their minds regarding their own next move.
Mr. Miller might well reply that the chairman of the Federal Reserve Board has a public obligation to make his view clear to his fellow citizens. That's quite true - within limits. But the nature of the job, and the current instability of the international economy, set those limits narrowly.
There's a certain irony in Mr. Miller's candor. his predecessor, Arthur Burns, fed the White House a heavy diet of public advice; it was a constant irritation to the administration, and became a leading reason for the president's decision to fire him. But even at his most didactic, Dr. Burns had a shrewd sense of the psychology that governs banks and markets. Mr. Miller come from the very different world of manufacturing industry, and has not yet had the opportunity to develop that delicate appreciation of the effects that his words will have in places like New York, London and Frankfurt.
Mr. Miller's job is not a simple one. It does not permit him simply to stop talking. Complete silence would incite the most ominous rumors and speculation. But the fine points of tax law and the future of the minimum wage are matters that he can properly leave to the Cabinet and to Congress. His immediate responsibility is monetary policy. There he would be wiser, in the present high-strung and uncertain atmosphere, to make his views known mainly through the Fed's actions. Mr. Miller is a solid and sensible man. But, in the money markets, he is a dealing with some very nervous people, and the stakes in the daily trading run exceedingly high.