Question

What caused stagflation? Why could the Nixon-Ford-Carter crowd not solve this problem?

Answer 1

1. Stagflation refers to the period of the 1970s that continued a bit into 1980s in which the US economy was devastated and in the worst shape since the Great Depression. There were three main causes for the stagflation and those were the inflation, economic stagnation and the rising prices.

2. The problem here was that never before has country has to face inflation, stagnation and price rise at the same time. The problem is these presidents did not know really what to do or where to start. Nixon and Ford firstly attacked inflation which did not help. Ford later focused on employment and the economic growth which helped but it was not a major turn that fixed everything. US was highly dependent on oil and that problem blew up thanks to the Oil Crisis that happened during the Carter presidency. He did though cut federal spending which only was evident during the Reagan. The stagflation was finally halted during Reagen's presidency and his supply-side economics but that created other problems.