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<blockquote data-quote="Old Man Jingles" data-source="post: 4171981" data-attributes="member: 18222"><a href="http://www.huppi.com/kangaroo/L-carterreagan.htm" target="_blank">Stagflation - The Carter Years</a>&#039;Solving inflation&#039; is a very generous description.Inflation was around 6% (still high) in 1976 but Carter via Volcker&#039;s monetary policies pushed the inflation rate up to 13.5% on purpose.Carter cannot be blamed for the double-digit inflation that peaked on his watch, because inflation started growing in 1965 and snowballed for the next 15 years. To battle inflation, Carter appointed Paul Volcker as Chairman of the Federal Reserve Board, who defeated it by putting the nation through an intentional recession. Once the threat of inflation abated in late 1982, Volcker cut interest rates and flooded the economy with money, fueling an expansion that lasted seven years. Neither Carter nor Reagan had much to do with the economic events that occurred during their terms.In 1980, the &quot;misery index&quot; -- unemployment plus inflation -- crested 20 percent for the first time since World War II. Ronald Reagan blamed this on Jimmy Carter, and went on to win the White House. Reagan then caught the business cycle on an upswing, for what conservatives call &quot;the Seven Fat Years&quot; or &quot;the longest economic expansion in peacetime history.&quot;In the following chart, take special notice of the long, slow climb in the inflation column:Year&nbsp; &nbsp; Inflation&nbsp; Unemployment (1)-------------------------------1961&nbsp; &nbsp; &nbsp; 1.0%&nbsp; &nbsp; 6.7%1962&nbsp; &nbsp; &nbsp; 1.0&nbsp; &nbsp; &nbsp;&nbsp; 5.61963&nbsp; &nbsp; &nbsp; 1.3&nbsp; &nbsp; &nbsp;&nbsp; 5.61964&nbsp; &nbsp; &nbsp; 1.3&nbsp; &nbsp; &nbsp;&nbsp; 5.21965&nbsp; &nbsp; &nbsp; 1.6&nbsp; &nbsp; &nbsp;&nbsp; 4.5&nbsp; &lt; Vietnam war spending increases1966&nbsp; &nbsp; &nbsp; 2.9&nbsp; &nbsp; &nbsp;&nbsp; 3.81967&nbsp; &nbsp; &nbsp; 3.1&nbsp; &nbsp; &nbsp;&nbsp; 3.81968&nbsp; &nbsp; &nbsp; 4.2&nbsp; &nbsp; &nbsp;&nbsp; 3.51969&nbsp; &nbsp; &nbsp; 5.5&nbsp; &nbsp; &nbsp;&nbsp; 3.51970&nbsp; &nbsp; &nbsp; 5.7&nbsp; &nbsp; &nbsp;&nbsp; 5.01971&nbsp; &nbsp; &nbsp; 4.4&nbsp; &nbsp; &nbsp;&nbsp; 6.01972&nbsp; &nbsp; &nbsp; 3.2&nbsp; &nbsp; &nbsp;&nbsp; 5.61973&nbsp; &nbsp; &nbsp; 6.2&nbsp; &nbsp; &nbsp;&nbsp; 4.91974&nbsp; &nbsp;&nbsp; 11.0&nbsp; &nbsp; &nbsp; 5.6&nbsp; &lt; First oil crisis1975&nbsp; &nbsp; &nbsp; 9.1&nbsp; &nbsp; &nbsp;&nbsp; 8.51976&nbsp; &nbsp; &nbsp; 5.8&nbsp; &nbsp; &nbsp;&nbsp; 7.71977&nbsp; &nbsp; &nbsp; 6.5&nbsp; &nbsp; &nbsp;&nbsp; 7.1&nbsp; Carter takes office1978&nbsp; &nbsp; &nbsp; 7.6&nbsp; &nbsp; &nbsp;&nbsp; 6.11979&nbsp; &nbsp;&nbsp; 11.3&nbsp; &nbsp; &nbsp; 5.9&nbsp; &lt; Second oil crisis1980&nbsp; &nbsp;&nbsp; 13.5&nbsp; &nbsp; &nbsp; 7.21981&nbsp; &nbsp;&nbsp; 10.3&nbsp; &nbsp; &nbsp; 7.6&nbsp; Reagan takes office1982&nbsp; &nbsp; &nbsp; 6.2&nbsp; &nbsp; &nbsp;&nbsp; 9.71983&nbsp; &nbsp; &nbsp; 3.2&nbsp; &nbsp; &nbsp;&nbsp; 9.61984&nbsp; &nbsp; &nbsp; 4.3&nbsp; &nbsp; &nbsp;&nbsp; 7.5Stagflation happened to reach its peak on Carter&#039;s watch, spurred on by the 1979 oil shock. How Carter can be blamed for a trend that began a decade and a half earlier is a mystery -- and a testimony as to how presidential candidates often exploit the public&#039;s economic ignorance for their own political gain.However, Carter did in fact take a tremendously important step in ending stagflation. He nominated Paul Volcker for the Chairman of the Federal Reserve Board. Volcker was committed to eradicating stagflation by giving the nation some bitter medicine: an intentional recession. In 1980, Volcker tightened the money supply, which stopped job growth in the economy. In response to hard times, businesses began cutting their prices, and workers their wage demands, to stay in business. Volcker argued that eventually this would wring inflationary expectations out of the system.The recovery of 1981 was unintentional, and with inflation still high, Volcker tightened the money supply even more severely in 1982. This resulted in the worst recession since the Great Depression. Unemployment in the final quarter of 1982 soared to over 10 percent, and Volcker was accused of the &quot;cold-blooded murder of millions of jobs.&quot; Even high-ranking members of Reagan&#039;s staff were vehemently opposed to his actions. Congress actually considered bringing the independent Fed under the government&#039;s direct control, to avoid such economic pain in the future. Today, economists calculate that the cost of Volcker&#039;s anti-inflation medicine was $1 trillion -- an astounding sum. But Wall Street demanded that Volcker stay the course, and that may have been the only thing that saved him.In the late summer of 1982, inflation looked defeated, so Volcker sharply expanded the money supply. Once as high as 14 percent in 1981, the Fed&#039;s discount rate fell from 11 to 8.5 percent between August and December 1982. Within months, the economy roared to life, and took off on an expansion that would last seven years. Because the recession had been so deep, and the number of available workers so large (with not only laid-off workers waiting to return to work, but also a record number of women seeking to join the workforce), the recovery was guaranteed to be long and healthy.</blockquote>

[QUOTE="Old Man Jingles, post: 4171981, member: 18222"] [B][SIZE=5][URL='http://www.huppi.com/kangaroo/L-carterreagan.htm']Stagflation - The Carter Years[/URL][/SIZE][/B] 'Solving inflation' is a very generous description. Inflation was around 6% (still high) in 1976 but Carter via Volcker's monetary policies pushed the inflation rate up to 13.5% on purpose. Carter cannot be blamed for the double-digit inflation that peaked on his watch, because inflation started growing in 1965 and snowballed for the next 15 years. To battle inflation, Carter appointed Paul Volcker as Chairman of the Federal Reserve Board, who defeated it by putting the nation through an intentional recession. Once the threat of inflation abated in late 1982, Volcker cut interest rates and flooded the economy with money, fueling an expansion that lasted seven years. Neither Carter nor Reagan had much to do with the economic events that occurred during their terms. In 1980, the "misery index" -- unemployment plus inflation -- crested 20 percent for the first time since World War II. Ronald Reagan blamed this on Jimmy Carter, and went on to win the White House. Reagan then caught the business cycle on an upswing, for what conservatives call "the Seven Fat Years" or "the longest economic expansion in peacetime history." In the following chart, take special notice of the long, slow climb in the inflation column: [B]Year Inflation Unemployment[/B] (1) ------------------------------- 1961 1.0% 6.7% 1962 1.0 5.6 1963 1.3 5.6 1964 1.3 5.2 [COLOR=#0000ff]1965 1.6 4.5 < Vietnam war spending increases 1966 2.9 3.8 1967 3.1 3.8 1968 4.2 3.5[/COLOR] [COLOR=#ff0000]1969 5.5 3.5 1970 5.7 5.0 1971 4.4 6.0 1972 3.2 5.6 1973 6.2 4.9 1974 11.0 5.6 < First oil crisis 1975 9.1 8.5 1976 5.8 7.7[/COLOR] [COLOR=#0000ff]1977 6.5 7.1 [B]Carter takes office[/B] 1978 7.6 6.1 1979 11.3 5.9 < Second oil crisis 1980 13.5 7.2[/COLOR] [COLOR=#ff0000]1981 10.3 7.6 Reagan takes office 1982 6.2 9.7 1983 3.2 9.6 1984 4.3 7.5[/COLOR] Stagflation happened to reach its peak on Carter's watch, spurred on by the 1979 oil shock. How Carter can be blamed for a trend that began a decade and a half earlier is a mystery -- and a testimony as to how presidential candidates often exploit the public's economic ignorance for their own political gain. However, Carter did in fact take a tremendously important step in ending stagflation. He nominated Paul Volcker for the Chairman of the Federal Reserve Board. Volcker was committed to eradicating stagflation by giving the nation some bitter medicine: an intentional recession. In 1980, Volcker tightened the money supply, which stopped job growth in the economy. In response to hard times, businesses began cutting their prices, and workers their wage demands, to stay in business. Volcker argued that eventually this would wring inflationary expectations out of the system. The recovery of 1981 was unintentional, and with inflation still high, Volcker tightened the money supply even more severely in 1982. This resulted in the worst recession since the Great Depression. Unemployment in the final quarter of 1982 soared to over 10 percent, and Volcker was accused of the "cold-blooded murder of millions of jobs." Even high-ranking members of Reagan's staff were vehemently opposed to his actions. Congress actually considered bringing the independent Fed under the government's direct control, to avoid such economic pain in the future. Today, economists calculate that the cost of Volcker's anti-inflation medicine was $1 trillion -- an astounding sum. But Wall Street demanded that Volcker stay the course, and that may have been the only thing that saved him. In the late summer of 1982, inflation looked defeated, so Volcker sharply expanded the money supply. Once as high as 14 percent in 1981, the Fed's discount rate fell from 11 to 8.5 percent between August and December 1982. Within months, the economy roared to life, and took off on an expansion that would last seven years. Because the recession had been so deep, and the number of available workers so large (with not only laid-off workers waiting to return to work, but also a record number of women seeking to join the workforce), the recovery was guaranteed to be long and healthy. [/QUOTE]

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