This essay discusses the inflation of the 1970s and the disinflations of the 1980s and 1990s. It provides historical and intellectual history perspectives on these events. It argues that the consensus view of economists on inflation and its costs has changed more than on any other subject in the past thirty years. As late as 1980, many economists argued that the cost of inflation was low and that the cost of disinflation so great that it was better to live with 10 or 12 percent inflation than bear the temporarily higher unemployment and lost output that would accompany a disinflation.
Fortunately, Federal Reserve Board chairmen Paul Volcker and Alan Greenspan engineered two rounds of disinflation, first from 12.0 percent to 4.5 percent and then to 2.5 percent. Although there were costs--a severe recession in 1981–82 and a not-so-soft landing in 1990–91--the low and relatively stable inflation of the 1980s and 1990s has been a major factor in a long boom in the United States, two long expansions interrupted by a short, mild recession. And economists' thinking about the costs and consequences of high inflation has shifted to the view that stable low inflation, like the lowest possible tax rates and minimum necessary regulation, is a fundamental pillar of maximizing sustained long-run growth.
Peter Berkowitz on The Conservatives: Ideas and Personalities Throughout American History by Patrick Allitt
Elizabeth Arens on Two Faces of Liberalism by John Gray
We look back at America during the last two decades of the twentieth century. Each decade was dominated by a two-term President and marked by long economic booms. Do these parallels suggest that 1990s were merely a continuation of the 1980s? Or does each decade have a unique place in American history?
Bernard-Henri Lévy, on point and off
The edifying commentator is also a flawed one
Jefferson to Polk to Truman to Reagan