ABSTRACT
In the preceding chapter we analyzed how the postwar monetary regime contributed to an unprecedented economic boom during the 1950s and 1960s. Its institutional provision of continuous credit extension and automatic "monetization" of debt helped to finance various channels for spending in excess of current income. The most important sources of excess spending were depreciation charges on industrial capital, consumer purchases of large-ticket items, regular budget deficits, and America's seigniorage benefit. The resulting stimulation on the demand side combined with monopolistic price regulation on the supply side to support real wage growth in line with productivity gains. This combination relaxed the monetary constraint in the production economy, as illustrated by the ability of firms to avoid deflationary price adjustments and to tum the devaluation of their plant and equipment into a source of cash flow.
