The post U.S. inflation might be down – but it is far from out appeared on BitcoinEthereumNews.com.

Inflation in the U.S. may seem to be cooling but don’t start celebrating yet. Sure, annual price increases have dropped closer to the Federal Reserve’s 2% target, but inflation has a nasty habit of staging a comeback when you least expect it. Remember the 1970s? Policymakers thought they had inflation beat, but it came back, and it hit hard. Inflation went from 2.7% in 1971 to 10% by 1974, dragging the economy into a severe recession. So anyone hoping inflation is truly dead now might be in for a surprise. Over the past few years, inflation has bounced from “transitory” to “persistent” and now just sits there, almost boring. Some economists are even throwing around terms like the “Goldilocks scenario,” where the economy is neither too hot nor too cold. But if history is any guide, it’s way too early to let our guard down. Lessons from the 1970s: Not so distant after all In the late 1960s, U.S. inflation was driven up by government spending on the Vietnam War and social programs. The Fed cranked up interest rates to nearly 10% in 1969, which triggered a brief recession.  Inflation dipped back down to 2.7% in 1971, but that didn’t last long. By 1974, inflation exploded back to 10%, and the economy got hit by another brutal recession. Many factors triggered the inflation crisis. First, in 1971, Richard Nixon cut off the U.S. dollar’s ties to gold, ending its convertibility into precious metals. At the same time, Nixon leaned on the Fed to keep the economy juiced up during his re-election bid, pushing for low unemployment over price stability. The pressure worked, and inflation crept back up. Oil prices tripled after OPEC imposed an embargo on countries supporting Israel during the Yom Kippur War, including the U.S. This energy crisis…

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Filed under: News - @ October 19, 2024 1:19 pm