Tuesday, April 07, 2009

Book: The Great Inflation and Its Aftermath: The Past and Future of American Affluence by Robert Samuelson

Inflation might not sound so bad during discussions of our sick economy. But you don't want to live through it. We did. It is very discouraging to see prices fly up while your income creeps up. We bought our current home with seller financing at 12%! A bank loan would have been higher. The prime rate for commercial transactions reached 20%. You can say we brought it on ourselves because we elected the President who called himself Jimmy - Honorable Jimmy Carter. No! I voted against the sorry man. Robert Samuelson is one of the best economic journalist/columnists he is thorough and nonpartisan and readable. He does an excellent job of simplifying what seems complex. I recommend his book: The Great Inflation and Its Aftermath: The Past and Future of American Affluence Amazon.com This is the mini-review from Publisher's Weekly: Newsweek and Washington Post columnist Samuelson is one of the rare journalists who debates politics and economics with a healthy skepticism toward conventional wisdom. The severity of the inflation that plagued the U.S. economy throughout the 1970s and early 1980s is often overlooked, but at the time it threatened to destabilize our entire monetary system. After World War II it was believed that downturns could be avoided by simply maintaining high employment, but that model ultimately led to the “stagflation” of the late 1970s and contributed to Jimmy Carter’s loss to Ronald Reagan in 1980. Through an unspoken alliance between Reagan and Fed chairman (and Democrat) Paul Volker, a deliberately engineered and very painful recession finally ended the inflationary spiral. Samuelson compares the challenges of that era to those we face now, and he is concerned that few leaders today have the fortitude to make the unpopular choices that will bring long-term solutions to the current economic crisis. Politicians would do well to study these errors of the past that teach that choosing quick fixes only delays and worsens the inevitable.

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