chapter  5
20 Pages

The Commitment to Permanent Inflation

WithKARL BRUNNER

A period of remarkable economic stability ended in 1965. The United States experienced over twenty years a solid expansion of output and employment, in contrast to the gloomy predictions made at the end of the second world war. Bursts of inflation in 1951-1952and 1955-57 were successfully contained by com­ paratively cautious financial policies. This heritage of a determined anti-infla­ tionary policy was reenforced under the Kennedy Administration by an essen­ tially modest and stable course of monetary and fiscal affairs. The price level re­ mained practically constant and interest rates reflected the absence of inflation. The prime rate stayed around 4.5 per cent until the middle of the 1960s.