Quote:
Originally Posted by tillman7
The Feds have the tools to curb inflation.
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History will repeat itself yet again.
When the Korean War began, rationing had just ended a few months earlier.
Households, business and industry were in a panic because they were certain the government would start rationing again, and so they started hoarding everything.
That caused Demand-pull Inflation and prices were rising at 10% annual rate.
To end it, all that needed to be done was for President Truwoman to get on the radio/TV and say:
1) Yes, we are going to ration, and here's where you can get your ration coupons; or
2) No, we have no intention of rationing anything; or
3) We are going to ration these items an no others
Instead, Truwoman moped and sulked in the Oval Office because the Supreme Court was beating up on him.
The Federal Reserve stupidly raised interest rates to stop something it could not stop because it is not the cause of Demand-pull Inflation and that crashed your economy and started a recession.
Had the Federal Reserve taken no action, Demand-pull Inflation would have ceased once households, business and industry saw there would be no rationing and then the war ended anyway so that was the end of that.
That wasn't the only time the Federal Reserve caused a recession by misinterpreting inflation data.
Apparently, you still haven't learned the differences between Monetary Inflation, Demand-pull Inflation, Cost-push Inflation, and Wage Inflation, which qualifies you to be a Federal Reserve board member.
Do let us know when you do learn.