You have just been sworn in as Chair of the Federal Reserve. The economy is in turmoil. The misery index — the sum of inflation and unemployment — is soaring. The dollar is under renewed pressure on foreign exchange markets.

Recent reports show CPI accelerating, driven by oil shocks and deeply entrenched inflation expectations. The public has lost faith in the government's ability to maintain the purchasing power of the currency.

President Carter has appointed you with a mandate to break the back of inflation, but the political pressure is immense. A severe tightening will almost certainly trigger a recession heading into his re-election year.