All Terrain Thinking

A Compendium of things I think are Important

Economics: It's not just whats' in your wallet

Ready for the 1970s

The successes of the Keynesian 'experiment' and the reason for their confidence seem apparent when we look at the unemployment rate in the 1960s. From the time of the tax cut through 1969 the economy continued to expand an unemployment fell to below 4 percent, the generally accepted definition of full employment.

There were, however, some signs that all was not well in Camelot. As indicated earlier, by the mid 1960s the headlines and lead news stories raised doubts about the Great Society and the ability of the government to solve all of the nation's problems. The nation was plagued by strikes, students had taken over control of universities, cities were burning, and the Keynesians were not able to deliver on their promise to 'fine-tune' the economy - or at least without a cost of higher inflation which by the end of the decade was approaching 7 percent. There was nothing, however, that could prepare one for the decade of the 1970s.

 

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