Any clue in '70s inflation?

In the 1970s-80s there was a 10 year period from the oil price shock in 1973 to peak in 1982 and back down by mid-1980s. This time it's broken through $40 in 2005, peaked in 2008 and is already back down. So - the inflation is over?

 

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February 19, 2007

SouthAmerica: Reply to Hydroblunt

In the mid 1970’s when I was in college I did read a very interesting book that gave me a detailed analysis of the roots of the economic mess that the US found itself in the 1970’s – the name of the book was “Inflation” by Michael Harrington. He also wrote a number of other books, but the book that made him famous was “The Other American.”

I was an undergraduate economics student at that time and Michael Harrington’s book made a lot of sense to me. The root of the problem of the inflation of the 1970’s was in the massive US defense spending going back to the mid 1960’s because of the Vietnam War.

Massive defense spending generates inflation in future years.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=87312&perpage=6&pagenumber=4

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I don't think that rice rocket or SA have quite hit the nail on the head.

Gnome is making some sense of this mess.

 

I suspect the cause of inflation is that voters are much more accepting of inflation than recession.

I remember during the 1970's oil prices increased either 9 fold in 10 years or 10 fold in 9 years. The increased cost of fuel may have something to do with increasing price values of many things.

Perhaps you are using the 1970's as a model for stock speculation. I recall some unpredictable and unknowable events during the period. I recall the microprocessor on a single chip was invented about 1975. I associate the development of the microprocessor as the origin of the microcomputer industry, something that did not exist previously. I recall significant growth stocks of the period were Intel, Texas Instruments, Hewlett Packard and later, Apple Computer. My point is there may be things happening now that are new, little known by the general public and unpredictable. Some of the new enterprises may grow a lot over the next 20 years.

 

Liquidity was never drained, M3 never stopped going up. The interest rates are not that powerful of a tool, contrary to what the media tells you.

Nothing was significantly different in the 1980s or 1990s from the 1970s outside technology (computers & internet) and primarily the advanced development of the financial services industry.

The only real reason you stopped seeing real goods inflation is due to asset inflation.

 

actually the 70's was a high growth boom economic expansion much what Asia or developing countries were experiencing.

the US was still expanding after world war 2 and inflation was rising with higher wages and the baby boomer generation were a lot more well off or had higher standards of living than their parents.

although the stock market was flat and range bound investments in real estate and commodity or real businesses in real economy was still expanding. Walmart and Mcdonalds was still small unknown companies in the early 70's

 

the stock market in the 70's was heavily regulated and you needed a broker to buy an y stock.

since commissions were like $100/trade for retail investors and commissions were fixed by brokerages trading swing trading or daytrading for retail investors/traders were not feasible. brokers could make a good living just on commissions if you had lots of clients.

and no forex, no options, no futures trading for retail.

the securities industry is a lot different now compared to the 70's

 

Hey asshole, if you can't help the thread move forward, you might as well get out of it. Or why don't you share with us what your wonderful profs taught you???

I am sure all those profs are rich from their investment decissions....

 

It's not "defense spending" per se... it's DEFICIT spending... regardless of whether it's on defense or not. Defense always happens to be the most common and convenient justification for overspending, however.

 

Over the past century, high inflation seems to be following a 30yr cycle. Prior to that more frequently.

Interestly, according to the chart, there's hardly been any negative inflation since 1950.

http://en.wikipedia.org/wiki/File:US_Historical_Inflation_Ancient.svg