Ending Inflation-Recession Without Cutting Sales, Jobs: Ending ...
The greatest barrier to solving our economic problems is the inability of government leaders to understand the difference between a World War II demand-pall inflation and the current 1974 cost-push inflation-recession. In the current environment, requests to cut spending and increase saving are partly responsible for our present economic crisis.</br></br>Perhaps the most notable example of demand-pull Inflation occurred after World War II. The end of the war found people with the desire and the money to buy all the things they had to do without for five years such as automobiles, refrigerators, appliances, houses and other durable and nondurable goods. This post-war spending spree injected a great amount of money into the economy in a relatively short period of time. Consumers were bidding against each other for scarce goods, which forced up prices, causing inflation.</br></br>was less than 4 per cent, and increased consumer buying pressures were forcing up prices and inflation. Govern ment actions to cool off the economy could include higher rates to discourage credit purchases: less government spending to reduce demand for goods: provision of tax breaks for industry to encourage plant expansion: and pressure on consumers to spend less and save more.</br></br>Essentially, these actions repreent the basis for the Ford administration's light against the present inflation-recession crisis.</br></br>But the rash of price increases we are now experiencing for consumer products is not caused by excessive consumer demand. It is the direct result of sudden huge price increases for energy and other basic commodities.