Why Did Inflation Always Come Back in the 1970’s and 1980’s?
Chris at Hauseit® (https://www.hauseit.com) goes over why inflation always came back stronger in the '70's and '80's when inflation expectations were unanchored. Back then, the Federal Reserve did raise rates, and managed to trigger recessions. However, inflation always came back stronger than ever after the Fed stopped their rate hikes and eased policy. Why is that?
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The risk of inflation expectations becoming unanchored, and a wage-price spiral being triggered is what keeps good central bankers up at night.
They love to study what happened in the '70s and '80s because back then, the Fed was unable to quell inflation until Volcker came around and raised rates to extreme levels (i.e. 20%) to finally break the back of inflation.
However, why did less extreme rate hiking policies and recessions fail? Why did inflation always come back after the Fed triggered a recession, stronger than before?
We explore this mystery in following video.
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Hauseit Group LLC, Licensed Real Estate Broker
Tel: +1 (888) 494-8258
Email: team@hauseit.com
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