From Publishers Weekly
Samuelson, a columnist for the Washington Post
, 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.)
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Newsweek and Washington Post columnist Samuelson is one of the rare journalists who debates politics and economics with a healthy skepticism toward conventional wisdom. The severity of the inflation that plagued the U.S. economy throughout the 1970s and early 1980s is often overlooked, but at the time it threatened to destabilize our entire monetary system. After World War II it was believed that downturns could be avoided by simply maintaining high employment, but that model ultimately led to the “stagflation” of the late 1970s and contributed to Jimmy Carter’s loss to Ronald Reagan in 1980. Through an unspoken alliance between Reagan and Fed chairman (and Democrat) Paul Volker, a deliberately engineered and very painful recession finally ended the inflationary spiral. Samuelson compares the challenges of that era to those we face now, and he is concerned that few leaders today have the fortitude to make the unpopular choices that will bring long-term solutions to the current economic crisis. Politicians would do well to study these errors of the past that teach that choosing quick fixes only delays and worsens the inevitable. --David Siegfried