Latest edition: Stagflation
First aired: July 9, 2014.
1970s America saw a new kind of inflation, based on supply and not demand: "stagflation," caused by Arab oil embargoes and worldwide crop failures. In 1973 President Ford and Fed Chairman Arthur Burns tried to control inflation by choking the money supply. They failed. In the 1990s the U.S. had three ways to ease inflation: Technological innovation, market globalization, and expenditure restraint. Demand management policies fight cost-push inflation only by causing extremely high unemployment, and rising inflation and rising unemployment can parallel each other.