Ross: A brief history of presidential efforts to fight inflation
Throughout history, presidents have tried various things to fix inflation.
In 1942, with a World War pushing prices higher, Roosevelt used radio personalities to preach self-restraint.
“If we all rush down to the store with our money in our hands and start bidding against each other for the few things left on that counter, prices will go zooming up. That’s why they’re urging us now not to buy anything we don’t absolutely need, but to make our own things do it. If there’s money burning a hole in your pocket, sock it away in war bonds and stamps,” as said on The Great Gildersleeve radio program.
The Great Gildersleeve. Believe it or not, that was before my time. But I do remember 1974 – when inflation hit 11%, and it was Gerald Ford’s turn:
“There is only one point on which all advisors have agreed: we must whip inflation right now,” Gerald Ford said.
It was all voluntary – people pledged to be thrifty, and wore buttons with the letters W-I-N. Even his own treasury secretary was embarrassed. It didn’t work.
He was followed by Jimmy Carter – who attacked inflation by cutting federal salaries and cutting federal regulations.
“Regulations are essential. They must be efficient. Where they fight inflation, they should be encouraged. For the unnecessary, they should be removed,” Jimmy Carter said.
That didn’t work either. By the time his one term ended in 1980, inflation hit 14.6%. That’s the year I bought our first house in Bellevue — with an interest rate of 15%.
Then came Ronald Reagan. He cut taxes, cut federal pay, and busted the Air Traffic controllers union. The prime interest rate went past 20%. There was a recession which pushed unemployment close to 10%, and since a lot of people lost their jobs, and couldn’t afford loans, prices had to drop.
And by the end of his second term, inflation was under 5%.
I lived through it.
But I wouldn’t want to see that again.
What I’d like to see is for this stock collapse to do the trick. The difference between the 80s and today is that basically everyone with money is in the stock market and is feeling significantly poorer right now. Maybe feeling poor enough to walk away from the overpriced house, to forego the muscle car for the hybrid car, to take the advice of the Great Gildersleeve.
Because I wouldn’t wish the return of the 80’s on anybody. Unless it means ABBA goes on tour again…that would be OK.
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