How the US Set Sail on a Sea of Red Ink

[marmar]

How the US Set Sail on a Sea of Red Ink

Wednesday, 09 September 2015 00:00
By JP Sottile, Truthout | News Analysis


A majority of Americans struggle daily to stay afloat on a sea of red ink, perpetually threatened by wave after wave of debt. This hasn't always been the case. The phenomenon can be traced back to 1978, when the US economy was sailing into dire straits.

The cumulative impact of the Vietnam War (which coincided with a large tax cut), the persistent misallocation of capital and the Arab oil embargo of 1973 created a lasting economic malaise that, by the middle of President Jimmy Carter's tenure, generated severe stagflation.

"Stagflation" is the pernicious intersection of stagnant economic growth with high unemployment and high inflation. It hits harder than a simple slowdown because it's accompanied by a sharp rise in the cost of living. It's a double whammy: The economy generates less wealth, and the wealth it does generate is worth less as prices spike. And it's a tough problem to solve.

On October 24, 1978, Carter gave a nationally televised speech that kicked off a voluntary anti-inflationary program recommending caps on wages and prices. Inflation had nearly doubled in just two years from 4.9 percent to 8.9 percent, and it spiked to over 13 percent by the end of 1979. Unlike today, most Americans simply had to cope with the rapidly rising cost of living without the help of a credit card. If you couldn't afford it, you simply couldn't afford it. It was up to President Carter to relieve the inflationary pressure crushing consumers. Pulling out a credit card simply wasn't an option for most middle-class families.

But that would start to change just one week later. .................(more)

http://www.truth-out.org/news/item/32700-how-the-us-set-sail-on-a-sea-of-red-ink

[daleanime]

1. K&R....

[msongs]

2. military industrial complex = squandering the wealth of the people nt

[Sherman A1]

3. Precisely

Hit the nail on the head.