Word: nationalizes
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Dates: during 1970-1979
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Question: What should a Government do when its economic policy seems likely to drive the nation into a recession...
...which our nose was rubbed in the new reality." Part of the new reality is that inflation is Public Enemy No. 1, that it is persistent and pervasive, and that it has built up such terrifying momentum in the U.S. as to be unstoppable, for the moment, unless the nation reduces the roughly 4%-per-year economic growth rate that it had come to consider normal...
...argue forcefully that the Government should not try to head off the recession or aim at a vigorous expansion once it ends. "It would be a horrendous error to try to fight the recession by anything other than minor palliatives," says Democrat Eckstein, who heads Data Resources Inc., the nation's leading economic analysis firm. Adds David Grove, a consultant to IBM who sometimes sides with the liberals: "The problem that the country has to face is whether it really wants to get the basic rate of inflation down very substantially, to cut it, say, in half. There...
...turnabouts occurred because 1978 was the year when the U.S. ran out of excuses for bad economic policy and performance. The collapse of the dollar drove home the truth that the nation is suffering from shockingly lower investment and productivity than its industrial rivals. (American output per hour worked rose a mere .3% in the twelve months ending last September, a record that one high Administration official calls "an utter disaster.") The trade deficit that looked freakishly large at $26.5 billion in 1977 grew even bigger, and this time it could not be wholly blamed on oil imports -which actually...
TIGHT MONEY. Excessively fast growth of the nation's money supply has been an important cause of inflation. The Federal Reserve has created so much money partly to cover budget deficits, partly to meet the credit demands of a growing and inflationary economy. Throughout 1978 the Fed kept letting interest rates rise to discourage borrowing; banks raised the prime rate 14 times, by a total of almost 4 points, to 11.5%. Loan demand stayed high, however, and money supply kept bounding up; in September it rose at an annual rate of 15.8%. But the cumulative effect of the interest...