chapter  24
10 Pages

Disinflation, 1979–1982

ByAllan H. Meltzer

Disinflation from 1979 to 1982 is a unique event in U.S. economic history. All previous disinflations – reductions in the inflation rate – followed wartime inflations. The disinflation that began in 1979 occurred almost a decade after the Vietnam War ended, and it was unrelated to the end of that war. Also, the disinflation came after several earlier attempts failed because the Federal Reserve, federal government and many in the public considered the cost of disinflation too high. By 1979, the public, and their representatives, were willing to accept temporarily higher unemployment to reduce inflation.