4 ms·

This article is missing a lot. For instance, it misses the international element completely. It does not mention one of the most important monetary facts of the

This article is missing a lot. For instance, it misses the international element completely. It does not mention one of the most important monetary facts of the 20th Century: that the USA dollar was allowed to float 1971. This was the end of the Bretton Woods system: https://www.bundesbank.de/en/tasks/topics/1973-the-end-of-bretton-woods-when-exchange-rates-learned-to-float-666280 https://www.bundesbank.de/en/tasks/topics/1973-the-end-of-br... The floating exchange rate helped the USA to hold on to manufacturing jobs, but caused inflation to go higher. This is a big fact to miss. "What the Great Inflation Taught Us" leans too much on accounts from Paul Volcker and Warren Buffet. It only shares the point of view of the market and investors. It does not include any point of view associated with manufacturing or labor. The essay doesn't mention the international context, the fact that inflation was often higher in other countries besides the USA. It doesn't attempt to explain some of the anomalies of the era, such as Japan, where inflation peaked at 26% despite the fact that Japan had a strengthening currency. The inflation of the era was international, and its beginning and end can only be understood in the international context. I made an attempt to look at this era from the point of view of the relationships between the developed and underdeveloped nations, and their currencies: https://demodexio.substack.com/p/why-did-the-west-deindustrialize https://demodexio.substack.com/p/why-did-the-west-deindustri...

photochemsyn 4y ago
Agreed. Also misses the global effect of the Arab oil embargo over US support for Israel in the 1973 war, which was amplified further by the rise of OPEC and the concommitant rise in international oil prices. This in turn caused a balance-of-payments problem, which in turn led to petrodollar recycling and the military-economic alliance between Gulf Arab states and the USA (and also, though this is largely forgotten, the Shah of Iran was a major player in that system before being deposed by the Iranian Revolution). Andrew Scott Cooper's The Oil Kings covers that in some detail: https://www.goodreads.com/book/show/12348743-the-oil-kings https://www.goodreads.com/book/show/12348743-the-oil-kings It's very relevant today as the spike in oil prices is fairly similar, and current US tensions with Saudi Arabia are not all that different from similar tensions with the Shah of Iran at the time. Additionally, I'm a bit skeptical about the author's claim that full employment is the number one cause of inflation.
- thrown_22 4y ago
  Economics is a thin veneer we paint over thermodynamics because we haven't figured out how to drink oil and eat uranium yet. That high ranking economists can complete gloss over facts like that today is as scandalous as medieval chroniclers who talk about god punishing them for their wickedness with plague and famine without mentioning the sun was blocked out by a volcano for a decade.
  - dylan604 4y ago
    > god punishing them for their wickedness with plague and famine without mentioning the sun was blocked out by a volcano for a decade. You might be glossing over the fact that perhaps god did the punishing by way of volcano eruption. Just like how god was upset about what the dinosaurs did (the blasphemy of those guys!!) by punishing them with an asteroid.
- JackFr 4y ago
  Also led to the invention of the Eurodollar. OPEC decided that world oil markets would be dollar denominated and the Soviet Union was making a bunch of money they didn’t want in US banks. European banks were happy to denominate deposits in dollars, despite being outside the US legal system and voila Eurodollars.
- RockyMcNuts 4y ago
  full employment surely can't help, if consumer prices going up is caused by too much demand and too little supply.
  - photochemsyn 4y ago
    As I note elsewhere, the U.S. unemployment rate dropped from 10.8% in 1982 (3.8% inflation) to 6.6% in 1986 (1.1% inflation).. so, inflation plunged while employment boomed... doesn't that completely upset that argument? Looking through the data, this doesn't really look like an outlier. The 1950s also had low unemployment and low inflation. (Note also that official unemployment numbers don't count the long-term unemployed, so there's some uncertainty in this data). See the following unemployment vs. inflation table: https://www.thebalancemoney.com/unemployment-rate-by-year-3305506 https://www.thebalancemoney.com/unemployment-rate-by-year-33...

photochemsyn 4y ago

Agreed. Also misses the global effect of the Arab oil embargo over US support for Israel in the 1973 war, which was amplified further by the rise of OPEC and the concommitant rise in international oil prices. This in turn caused a balance-of-payments problem, which in turn led to petrodollar recycling and the military-economic alliance between Gulf Arab states and the USA (and also, though this is largely forgotten, the Shah of Iran was a major player in that system before being deposed by the Iranian Revolution). Andrew Scott Cooper's The Oil Kings covers that in some detail: https://www.goodreads.com/book/show/12348743-the-oil-kings https://www.goodreads.com/book/show/12348743-the-oil-kings It's very relevant today as the spike in oil prices is fairly similar, and current US tensions with Saudi Arabia are not all that different from similar tensions with the Shah of Iran at the time. Additionally, I'm a bit skeptical about the author's claim that full employment is the number one cause of inflation.

thrown_22 4y ago
Economics is a thin veneer we paint over thermodynamics because we haven't figured out how to drink oil and eat uranium yet. That high ranking economists can complete gloss over facts like that today is as scandalous as medieval chroniclers who talk about god punishing them for their wickedness with plague and famine without mentioning the sun was blocked out by a volcano for a decade.
- dylan604 4y ago
  > god punishing them for their wickedness with plague and famine without mentioning the sun was blocked out by a volcano for a decade. You might be glossing over the fact that perhaps god did the punishing by way of volcano eruption. Just like how god was upset about what the dinosaurs did (the blasphemy of those guys!!) by punishing them with an asteroid.
JackFr 4y ago
Also led to the invention of the Eurodollar. OPEC decided that world oil markets would be dollar denominated and the Soviet Union was making a bunch of money they didn’t want in US banks. European banks were happy to denominate deposits in dollars, despite being outside the US legal system and voila Eurodollars.
RockyMcNuts 4y ago
full employment surely can't help, if consumer prices going up is caused by too much demand and too little supply.
- photochemsyn 4y ago
  As I note elsewhere, the U.S. unemployment rate dropped from 10.8% in 1982 (3.8% inflation) to 6.6% in 1986 (1.1% inflation).. so, inflation plunged while employment boomed... doesn't that completely upset that argument? Looking through the data, this doesn't really look like an outlier. The 1950s also had low unemployment and low inflation. (Note also that official unemployment numbers don't count the long-term unemployed, so there's some uncertainty in this data). See the following unemployment vs. inflation table: https://www.thebalancemoney.com/unemployment-rate-by-year-3305506 https://www.thebalancemoney.com/unemployment-rate-by-year-33...