The Inflation of the 1970s
The inflation of the 1970s was a time when uncertainty about prices prevailed among Americans. ... inflation rate rose from a 0-3% range typical of peacetime America, to the high 5-10% range. The 1970s were America’s only peacetime inflation. In fact, the inflation in the 5-10% per year range in the 1970s was as large as the jumps in the price level as a result of the major wars of this century.
At the very basic level, the inflation burst in the United States in the 1970s was a result of the lack of involvement by political policymakers. Not until Paul Volcker took office as Chairman of the Federal Reserve had any influential policy makers placed a sufficiently high priority on stopping inflation. ...
At a deeper level, the United States witnessed the dramatic inflation rise of the 1970s because the economic policy makers of the 1960s had made poor economic decisions which left this inflation as a poor reality for the policy makers of the 1970s. ...
The burst of inflation in the 1970s did not end until the early 1980s because no one in Washington DC had authorization to do what was needed to push inflation below the four percent level. It took the entire decade for the Federal Reserve as a working institution to earn the power and freedom of action that was necessary to control inflation. After the lessons of the 1970s, the force of the American political opinion was willing to grant the Federal Reserve the authority to do whatever was necessary to control inflation.
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