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50 Years Ago, Hyperinflation Knocked Out Three U.S. Presidents

The Russian-Ukrainian crisis may have kept U.S. inflation high, reminding many of the nightmare that swept across the United States some 50 years ago with an unprecedented hyperinflationary crisis. The severe crisis nearly destroyed the U.S. economy and brought back memories of disaster for countless Americans. In the 1970s, the U.S. had three presidents, Nixon, Ford and Carter, who took different measures to deal with the “tiger in the cage” of hyperinflation, but all were unsuccessful.

Nixon regulated wages and prices

After World War II, the United States experienced more than 20 years of high growth and low inflation. By the 1960s, government spending rose sharply due to domestic and foreign factors such as the Vietnam War, and the fiscal deficit increased. And, internationally, the rise of the Japanese and German economies, the decline of the U.S. manufacturing industry, as the U.S. gold reserves plummeted, the dollar’s position also faltered. At the beginning of the 1970s, U.S. prices rose rapidly, the U.S. economy and society faced with high inflation, high unemployment and low growth rate of the dilemma. In 1970, for example, the U.S. economy experienced negative growth rates, unemployment rose to 4.9%, and inflation rose to 5.9%, and U.S. economists and the general public became generally concerned. On August 15, 1971, President Richard Nixon made a televised speech announcing to the world that the U.S. dollar had been unpegged from gold and that wage price controls would be in place for three months. 90 days later, the Nixon administration extended the price freeze to a wider range of commodities. So much so that everything from athletes’ salaries to the price of food and even pudding cakes were included in the price limits. At that time, if companies wanted to adjust the price of their products or raise the salaries of their employees, they had to? Be sought permission from the U.S. government.

In the previous period, Nixon’s anti-inflationary measures were beginning to bear fruit. According to official data, inflation was curbed to a certain extent, for example, the annual growth rate of toothpaste prices was 1%, TVs increased by 0.3%, and men’s haircut costs increased by 0.4%. For example, farmers no longer send their cattle to slaughterhouses, but through meat processors to transport beef to Canada, repackaged and then “imported” into the United States, thus indirectly increasing prices. The media also broke another story that a chicken farm owner in Texas drowned more than 40,000 of his chicks to reduce losses, because the price of chickens was frozen by the government, while the price of feed was rising. On the other hand, price control caused an artificial shortage of supplies, consumers almost emptied the shelves of supermarkets. This was mocked by Archie Bunker, the main character in the then popular American soap opera “All in the Family,” in which he ate spaghetti bolognese without meat.

Nixon’s policy drew widespread criticism, with Wharton professor Jeremy Siegel calling it “the greatest failure of U.S. macroeconomic policy in the postwar era.

Ford asks pastor to pray to control inflation

In August 1974, Nixon resigned in disgrace over the Watergate scandal, and his deputy, Ford, took over as president. President Ford faced a vicious backlash from price controls in the post-Nixon period and had no better way to deal with the negative growth of the U.S. economy for years, while the inflation rate was as high as 9.8%. Before the meeting began, Ford asked the White House chaplain to lead the participants in prayer, asking God to help the United States to fight inflation, and the prayer went like this: “May we not only find a way to deal with inflation, but also to control it; not only to control it, but also to master it completely.

Eleven days later, President Ford addressed Congress and, in front of television cameras, called on the entire nation to “save energy and reduce consumption,” which was at the heart of his economic strategy to deal with high inflation and high unemployment. Ford said that to defeat inflation requires the use of America’s most valuable resource, which is the ingenuity, skill and strength of will of the American people. Ford called on the American people to consciously save, such as shopping for things, try to buy cheap things a “dare to show off to others that they choose to buy cheap goods, and feel proud of it. Also to use energy sparingly, he suggested that people open their own garden to grow vegetables. To reduce energy consumption, Ford suggested driving as little as possible, and when you must drive, try to share a car with as many people as possible; also to reduce energy consumption, he also said he wanted to eat more stewed things, less power barbecue, and urged other Americans to do the same.

In those days, President Ford always attended public events with a badge on the lapel of his shirt, with three capital letters “WIN” written on it. In his speech, Ford explained that WIN stood for “Stop Inflation Now” and also meant victory, meaning that the American people would eventually win against hyperinflation. The famous American lyricist Meredith Wilson also wrote a song for the “WIN” campaign, entitled “Who Needs Inflation? Not this country”. The majority of people did not buy the slogan of Ford’s campaign against inflation. Comedian Bob Hope joked that President Ford went on TV and said he wanted to whip (Whip means “whip”) inflation, and within half an hour the price of a whip went up 50 cents. Some people took the “WIN” badge itself and made an issue of it, interpreting it as “Where in Nixon”, implying that Ford was not as smart as Nixon in the face of inflation; others wore the badge upside down, as Others wore the badge upside down as “NIM” and explained that it meant “No Immediate Miraeles”. A columnist for the New York Daily News also poked fun at the fact that “according to the latest polls, 55 percent of Americans say they can’t afford a ‘WIN badge.” …… The “WIN” campaign was called “incredibly stupid” by Alan Greenspan, then economic advisor to the government and later chairman of the Federal Reserve.

Carter’s rate hike brought the economy to a hard landing

Not surprisingly, in the subsequent 1976 presidential election, Ford lost to Democratic Party candidate Jimmy Carter. The Carter administration was at the height of the hyperinflationary crisis of the 1970s, when the United States was facing the “three highs”, i.e., double-digit inflation, unemployment and interest rates. The pressure on President Carter was unprecedented. On July 15, 1979, two-thirds of Americans watched President Carter’s 30-minute public speech on television, entitled “Crisis of Confidence,” but it became customary to refer to the title of this famous speech as “A Stumble. Four days after the speech, Carter fired all 13 members of his cabinet. With the goblet he appointed Paul Volcker as chairman of the Federal Reserve,’ an appointment that was later seen as the key to finally helping the United States out of the hyperinflation crisis. Carter once tried to combat economic weakness and unemployment by increasing government spending, which required an appropriate reduction in interest rates, but Paul Volcker strongly disagreed to lower interest rates and eventually climbed them to an unimaginable 20% to curb inflation. Paul Volcker once ridiculed himself as “having to make a deal with the devil” for choosing to fight inflation by “making enemies of the world”, but it was his hardest move that forced the U.S. economy to achieve a hard landing, but also put his own hopes for the re-election of President Jimmy Carter in ruins.

Even after President Reagan took office in 1980, this crisis did not end soon. The hyperinflation was both like a tiger and a volcano that did not reach its inflection point until the energy was released. In fact, from 1970 to 1982, this hyperinflationary crisis raged for 13 years, during which the average growth rate of GGG was only 2.9%, the average annual inflation rate reached 10.46%, and the unemployment rate reached 10.8% at its peak. In 1979 alone, nearly 1.11 million businesses went bankrupt and 8.36 million people were forced out of work.

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