!<http://mises.org/images3/Dow65-84.gif! For some reason the 1970s don’t have a fancy label although I remember stagflation. Like the depression, it all started with the 1960s which featured massive deficit spending (to fund the Vietnam War, sound familiar) and loose monetary policy to reduce the sting of the deficit (sound familiar) but which caused a massive bubble in spending, borrowing http://mises.org/story/1507
So this time inflation rather than deflation was the story because the deficits didn’t get trimmed and the monetary policy was loose. Trying price controls really didn’t work. Sadly, the dates are nearly identical, 1929 for the stock crash, then 1969 then 2008 (hmm, what is it about every 40 years, maybe everyone dies from the last time -)
Why did this happen, well the war for one thing, but then the Great Depression which had price deflation meant the 1970s were all about massive stimulus which caused inflation. See “Market Oracle”:http://www.marketoracle.co.uk/Article4075.html
