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COMMENTARY OF THE DAY
By
Robert Namer
Voice Of America
©2021 All rights reserved
October 16, 2021

     A feckless Team Biden has set America up for a new round of 1970s-style stagflation. The similarities between then and now are eerie. Seventies stagflation resulted from profligate fiscal policy, politicized monetary policy and food and energy shocks. President Lyndon Johnson’s guns-and-butter decision to simultaneously finance both the Vietnam War and his Great Society programs triggered a wave of demand-pull inflation.

     After President Richard Nixon appointed Arthur Burns as Federal Reserve chair, Burns cranked up the Fed printing press in support of Nixon’s re-election efforts. The resulting currency debasement forced Nixon to abandon the US dollar standard, the linchpin of the global monetary system; the dollar cratered, driving up import prices and further stoking inflation. The US economy also suffered two crippling supply-side crises. Food prices soared as a result of bad weather, Soviet grain purchases and cropland mismanagement. Energy prices skyrocketed, thanks to the Arab oil embargo. When President Jimmy Carter ran against Ronald Reagan for re-election, America’s “misery index” — the unemployment rate plus the inflation rate — had breached 20 percent.  The economy will get much worse, under Biden.

     

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