Great Inflation and Its Aftermath: The Past and Future of American Affluence

The Great Inflation in the 1960s and 1970s, notes award-winning columnist Robert J. Samuelson, played a crucial role in transforming American politics, economy, and everyday life. The direct consequences included stagnation in living standards, a growing belief—both in America and abroad—that the great-power status of the United States was ending, and Ronald Reagan’s election to the presidency in 1980. But that is only half the story. The end of high inflation led to two decades of almost uninterrupted economic growth, rising stock prices and ever-increasing home values. Paradoxically, this prolonged prosperity triggered the economic and financial collapse of 2008 and 2009 by making Americans—from bank executives to ordinary homeowners—overconfident, complacent, and careless. The Great Inflation and its Aftermath, Samuelson contends, demonstrated that we have not yet escaped the boom-and-bust cycles common in the nineteenth and early twentieth centuries. This is a sobering tale essential for anyone who wants to understand today’s world.

Publishers Weekly

Samuelson, a columnist for the Washington Post and Newsweek, presents a highly readable and thought-provoking discussion of the crippling inflation that hit the United States from the mid-1960s to 1982, resulting in four recessions. According to the author, the culprit of inflation was the "collective failure of communication and candor by the nation's economists"; their bad advice became bad policy as both parties in the White House propagated "economic ignorance" that led to the Great Inflation. The memory of the Great Depression led to "a full employment obsession"-among other dangerous myths and stereotypes that were the "major barrier" to economic convalescence-culminating in a stalemate that was only lifted during the "accidental alliance" between Reagan and Federal Reserve chairman Paul Volcker. While business cycles seem milder now ("The Great Moderation"), the author argues that the cycle could repeat. The book's detailed sketches of the working of the Federal Reserve, stock market and corporate America give a comprehensive picture of the economy, which Samuelson describes as a "social, political, and psychological" mechanism encompassing ideas and values as much as trade and finance. (Nov.)

Robert J. Samuelson is a columnist for Newsweek and The Washington Post. He began his journalism career as a reporter for the Post in 1969. He is the author of The Good Life and Its Discontents: The American Dream in the Age of Entitlement, 1945-1995 and Untruth: Why the Conventional Wisdom Is (Almost Always) Wrong, a collection of his columns. He lives in Bethesda, Maryland, with his wife, Judy Herr. They have three children.