An Overview of Economic Stagflation in the 1970s

An Overview of Economic Stagflation in the 1970s The term stagflation- an economic condition of both continuing inflation and stagnant business activity (i.e. recession), together with an increasing unemployment rate- described the new economic malaise in the 1970s pretty accurately. Stagflation in the 1970s Inflation seemed to feed on itself. People began to expect continued increases in the price of goods, so they bought more. This increased demand pushed up prices, leading to demands for higher wages, which pushed prices higher still in a continuing upward spiral. Labor contracts increasingly came to include automatic cost-of-living clauses, and the government began to peg some payments, such as those for Social Security, to the Consumer Price Index, the best-known gauge of inflation. While these practices helped workers and retirees cope with inflation, they perpetuated inflation. The governments ever-rising need for funds swelled the budget deficit and led to greater government borrowing, which in turn pushed up interest rates and increased costs for businesses and consumers even further. With energy costs and interest rates high, business investment languished and unemployment rose to uncomfortable levels. President Jimmy Carters Reaction In desperation, President Jimmy Carter (1977 to 1981) tried to combat economic weakness and unemployment by increasing government spending, and he established voluntary wage and price guidelines to control inflation. Both were largely unsuccessful. A perhaps more successful but less dramatic attack on inflation involved the deregulation of numerous industries, including airlines, trucking, and railroads. These industries had been tightly regulated, with the government controlling routes and fares. Support for deregulation continued beyond the Carter administration. In the 1980s, the government relaxed controls on bank interest rates and long-distance telephone service, and in the 1990s it moved to ease regulation of local telephone service. The War Against Inflation The most important element in the war against inflation was the Federal Reserve Board, which clamped down hard on the money supply beginning in 1979. By refusing to supply all the money an inflation-ravaged economy wanted, the Fed caused interest rates to rise. As a result, consumer spending and business borrowing slowed abruptly. The economy soon fell into a deep recession  rather than recovering from all aspects of the stagflation that had been present. Source This article is adapted from the book Outline of the U.S. Economy by Conte and Carr and has been adapted with permission from the U.S. Department of State.

10 Things to Know About Croesus of Lydia

10 Things to Know About Croesus of Lydia Croesus is just as famous for what he did, as for who he knew. He was connected with many other famous figures, including Aesop, Solon, Midas, Thales, and Cyrus. King Croesus encouraged trade and mining, and his resultant wealth was legendary - as was much of his life. 10 Points to Be Familiar With About Croesus Have you read Aesops fables about the clever and not-so-smart animals? Croesus gave that Aesop an appointment in his court.In Asia Minor, Lydia is considered the first kingdom to have coins and King Croesus minted the first gold and silver coins there.Croesus was so wealthy, his name became synonymous with wealth. Thus, Croesus is the subject of the simile rich as Croesus. One might say Bill Gates is as rich as Croesus.Solon of Athens was a very wise man who made laws for Athens, for which reason he is called Solon the law-giver. It was in conversation with Croesus, who had all the wealth he could want and was, seemingly, perfectly happy, that Solon said, count no man happy until his death.Croesus is said to have derived his wealth from King Midas (the man with the golden touch) gold deposits in the river Pactolus.According to Herodotus, Croesus was the first foreigner to come in contact with the Greeks.Croesus conquered and received tribute from the Ionian Greeks.Croesus tragically misinterpreted the oracle that told him that if he crossed a certain river he would destroy a kingdom. He didnt realize the kingdom that would be destroyed would be his own. Croesus was defeated by the Persian King Cyrus, proving how prescient Solon the law-giver had been.Croesus was responsible for the loss of Lydia to Persia [becoming Saparda (Sardis), a satrapy under the Persian satrap Tabalus, but with the treasury of Croesus in the hands of a native, non-Persian, named Pactyas, who soon revolted, using the treasury to hire Greek mercenaries]. This change led to conflict between the Ionian Greek cities and Persia aka the Persian Wars. Sources on Croesus and Solon Bacchylides,  Epinicians