PIERRE, S.D. (KELO) — The sharp recent rise in prices has the South Dakota Banking Commission concerned.
The commissioners said Wednesday they are worried about inflation again, after going through the last round some 40 to 50 years ago.
At the same time, they’ve seen deposits in South Dakota-chartered banks rise 23% during the coronavirus pandemic, from $24 billion before COVID-19 began to about $31 billion. Federal Paycheck Protection Program loans to businesses are one big reason.
Chairman Jeff Erickson of Sioux Falls recalled that 1982 was the last time the U.S. economy went through double-digit inflation.
The Federal Reserve board needs to get engaged or the nation runs the risk of stagflation again, Erickson said: “That will drive business in the ditch pretty fast.”
Commissioner John Johnson of Piedmont said things “could get pretty scary.” He said the Federal Reserve leaders had blamed the pandemic for inflation.
“If they don’t start to make some moves, we’re going to have to have Paul Volcker back to get it fixed,” said Johnson, referring to the Fed’s legendary anti-inflation hawk.
Better commodity prices have reduced stress on agricultural producers. State government has seen strong revenue from sales and use tax.
“The issues we’re dealing with are self-inflicted wounds and not credit related,” state banking director Bret Afdahl said.