STAGFLATION? The Fed could never raise rates to 20% or endure a similar recession to curb inflation this time.

#STAGFLATION ?

1/

1969, Nixon followed Johnson, who had spent generously on the “Great Society” & the Vietnam War

2017, Trump followed Obama, who had spent generously: “American Recovery on Reinvestment Act,” Troubled Assets Relief Program, O’Care & many military conflicts

 

1A/

(The money creation and spending of the 1960s WAS THE INFLATION of the 1970s. The 1970s was the price response to the inflation).

(The money creation and spending of the 2009-2017 IS THE INFLATION of the next decade, the price response is only beginning)

 

2/

Nixon ran large #budgetdeficits, making #dollar-holders overseas anxious. There was a run on the dollar, which many foreigners and Americans thought was overvalued

Trump is running large budget deficits, making #treasury holders nervous. Many believe the dollar is overvalued

 

3/

Nixon’s primary concern was to avoid #recession and get the #economy to boom. Nixon put pressure on the #Fed for lower #interestrates.

Trump’s primary concern is to avoid a recession and get the economy to boom. Trump does not want the Fed to raise interest rates.

 

4/

Nixon said: “We’ll take inflation if necessary, but we can’t take #unemployment.” The nation eventually had too much of both.

Trump wants neither, but keeping unemployment low certainly seems like a major priority.

 

5/

In 1973, #inflation more than doubled to 8.8%. Later in the decade, it would go to 12%. By 1980, inflation was at 14%

In 2018, nobody has a clue where inflation really is, as the measurements are completely different. But using a metric from 1970-1980s inflation stands at 9%

6/

It took a new Fed chair, a policy of tight money & high rates nearly 20%, (and a recession) before inflation broke. The U.S. had UE that exceeded 10% during this time

The Fed could never raise rates to 20% or endure a similar recession to curb inflation this time.

 

h/t @OccupyWisdom

724 views