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Stagflation Of The 1970s Essay

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Inflation has been an ongoing issue in American history. The United States is experiencing inflation today, a prime example of inflation in the United States today are gas prices. Recently there has been a significant increase in gasoline prices, due to high demand and low supply. The inflation in our society occurring today has great similarities compared to the stagflation of the 1970s, because of the oil crisis occurring today and the 1970s. Many of the economic conditions the United States is experiencing today are similar to the ones in the 1970s. These economic conditions were the fault of the president serving their term during the stagflation of the 1970s, President Richard Nixon. The Stagflation of the 1970s also referred …show more content…

The oil crisis was due to the oil embargo. Within the period 1973 to 1974, the Arab-Israeli war, also known as the Yom-Kippur war, was going on. The United States supplied and supported the Israeli military during this war, because of this the Arab members in the OPEC which stands for the Organization of Petroleum Exporting Companies stood against the United States and enforced an embargo. An embargo is “an order to temporarily stop something, especially trading or giving information.” This embargo disallowed imports of petroleum to the United States, significantly impacting the economy in a negative way. After this embargo the impact it had on the citizens of the United States was immediate, the United States was one of the largest consumers of the world's oil, meaning millions of Americans were affected. There was a 387 percent increase in the price of oil and even when the embargo ended the price of the oil was still 33 percent higher than the price before the oil crisis. Since the oil embargo of 1973, the United States has been relying less on oil from foreign nations, as well as using other forms of energy such as renewable energy. During the period of the Great Inflation, the president serving his term was President Richard Nixon whose presidential term was (January 20, 1969 – August 9, 1974). President Nixon came into the White House with many …show more content…

Although President Nixon's intentions to combat these issues were positive, his actions led to a terrible economic recession. The first thing Nixon did was make it seem that the economy is gradually getting better, he implemented a policy of monetary restraint. This action did not provide results quickly. President Nixon had his re-election coming up therefore he was anxious to get results. He turned to the chairperson of the Federal Reserve and delayed the pay raises to federal employees. Unemployment rates kept increasing. Nixon then did what would be called the “Nixon shock”, this was the decision he took where the “dollar would be pegged to gold at $35 an ounce. Other central banks could exchange the dollars they held for gold. In that sense, the dollar was as good as gold. Every other currency had a fixed exchange rate to the dollar.” Nixon implemented this so the value of the dollar decreases. After this action, there was a positive economic boom, which conveniently lasted through his re-election period, but in 1973 everything started falling for President Nixon. There was a shortage of food, combined with a significant rise in oil prices and unemployment which eventually led to the Stagflation of the

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The energy crisis began after OPEC seized oil production because of the, “anger at the United States for aiding Israel.” (Farber, 22) This caused a mass panic amongst Americans and resulted in long waits to get gas and constant fuel outages. Carter was extremely adamant that Americans reduce their consumption of fuel in order to reduce the extent of the energy crisis, at one point suggesting putting heavy penalizing taxes on non-fuel efficient vehicles. Political journalist Nicholas Lemann recalled, “[The energy crisis was] the automotive equivalent to the Depression’s bank runs.”

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The collapse of economic stability in the US was caused by World War 1 and the flawed decisions of President Herbert Hoover. These components and others prompted and worsened the Great Depression. The Great Depression was a dark time of history (globally) a time of poverty, homelessness, mass unemployment, and deflation. During this time, President Hoover did virtually nothing to aid the people and let people suffer as he believed that the economy would fix itself. In this dark time, Franklin D. Roosevelt came into the presidency in 1933 and began trying to re-stabilize and stimulate the economy.

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This really affected Americans to question their leaders. In 1971, Nixon prompted the situation with OPEC by removing the United States from the gold standard. This affected the US because countries could no longer redeem the U.S. dollars in their foreign

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During this time Nixon was running for presidency and was running on a campaign that promised a return of more “conservative social and economic policies and a restoration of law and order”(Brinkley 741). He was voted into office, and by the year 1973 he had abolished the Office of Economic Opportunity. By the early 1970’s the United States was starting to see “long-term transformation of the American Economy”(Brinkley 745). During the 1970’s the United States was starting to experience extreme rises in inflations because of the end of cheap raw materials. During this time the cost of living rose by up to 15 percent (Brinkley).

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The world together with the American economy experienced downturns less than a year into Hoover’s presidential term. The Hoover hoped that the situation was going to improve but when the economy edged into the depression, Hoover developed and implemented a number of strategies to manage the situation. Hoover did not believe in direct influence by the federal government. The Hoover rejected proposals to change the value of the currency because he felt that was socialism. Hoover believed it was possible to improve the economy without interfering with American individualism.

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Many would put Richard Nixon in the top five on a list of America’s worst presidents. Those who share in this opinion focus only on the negative aspects of Nixon’s presidency and fail to see all of the things he succeeded in doing. Nixon’s presidency encompassed great achievements especially in the category of foreign policy. Throughout his presidency, Nixon shaped United States’ foreign policy and had many events to show for it. For example, Nixon gained popularity for being the president who finally ended the war in Vietnam.

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