Story of Inflation in the United States by Asher Parmenter

The Great Society-Lyndon B. Johnson 1960's

asherparmenter — 2024-02-02 18:23:28 UTC

In the 1960's President Lyndon B Johnson tried to tackle poverty by "Our chief weapons in a more pinpointed attack will be better school and better health and better homes and better training and better job opportunities to help more Americans escape from squalor and misery."

Government Spending Starting 1960-1970

asherparmenter — 2024-02-02 18:27:07 UTC

In the 1960's the Government started spending more on things such as the Vietnam War, and other things. They started spending more and more which went all the way into the 1970's. Prices started increasing which led to people saving and demanding higher wages. Prices and wages were in an upward spiral.

Gas Prices Rise Early 1970's and 1979

asherparmenter — 2024-02-02 18:29:04 UTC

In the Early 1970s and 1979 there was a gas recession where gas stations could not afford to fill up cars with large tanks, so they started greatly increasing gas prices, which led to a lot of societal unrest.

Paul Volcker- 19790early 1980's

asherparmenter — 2024-02-02 18:34:57 UTC

Paul Volcker was the head of the Federal Reserve who waged a war against inflation when Jimmy Carter was president. He gives a meeting on how he is going to change the monetary system, and starts to increase interest rates. He increases these interest rates to 17.6% in 1979, then again to 19% in 1981. People stop spending as much money on things where they need loans such as cars, homes, and using a credit card. America sinks into a bad recession.

Aftermath of Volcker's Interest Policy- 1980-1990

asherparmenter — 2024-02-02 18:42:05 UTC

After Paul Volcker introduced the high interest rates America fell into a very bad recession. People are not able to buy anything. They do not have much money, as their wages are not rising and the prices of everything else are. There are car lots with a lot of unsold cars, homebuilders that can't sell houses, etc. Americans are very upset as everything is so expensive. People start to protest in front of the white house and the capital, protesting these outrageous interest rates.

Aftermath of Volcker's Interest Policy (Part 2) 1980-1990

asherparmenter — 2024-02-02 18:45:29 UTC

Paul Volker's plan to wage war against inflation eventually started to work. In 1980 the inflation rate was 14.6%, and then in 1986, it was closer to 1%. Businesses started to invest again, Consumers are able to buy things like cars and houses again, and by the late 1980s and early 1990's the economy was starting to become very strong. Volcker's plan worked in the long run, but not without causing a little bit of pain for the economy.

Jay Powell- 2018- current

asherparmenter — 2024-02-02 18:48:42 UTC

Jay Powell is the current head of the Federal Reserve. He grew up in the inflation era and is a big fan of Paul Volcker. Today as inflation rates are rising, he wants to emulate what Paul Volcker did, by increasing interest rates. He does not want to do it at the same scale that Volcker did, but raise interest rates a little to try combat the rising inflation %.

Likely Outcome/Consequences of Jay Powell - current-future

asherparmenter — 2024-02-02 18:52:40 UTC

The likely outcome/consequence of Jay Powell raising interest rates is that it will hurt a little, but will eventually be good in the long run. People will be upset that the interest rates are raising, and will hesitate to do things such as buy a car or a house with a loan. This will make the rate of inflation decrease, which will ultimately be good for the economy. If the inflation rate keeps rising then so will the cost of living and wages, and more people will ultimately struggle, as the price of a dollar will decrease. While this small increase in interest rates may sting, it will ultimately be good for the economy, and will slow down the rate of inflation.