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BPEA Article

The Recent Acceleration of Inflation and Its Lessons for the Future


THE BEST-KNOWN ECONOMIC FACT in the United States, among economists,
investment advisers, housewives, and everyone else, is that the rate
of inflation has been significantly higher during the past two years than at
any time since the Korean war. It has increased despite the best efforts of
Washington policy makers to restrain it through, first, the tax surcharge
of July 1968; second, a reduction in the growth of the money supply virtually
to zero beginning in June 1969; and third, a strenuous effort by the
administration to reduce federal expenditures even to the point of the veto
of a large education bill.

Robert J. Gordon

Stanley G. Harris Professor of the Social Sciences - Northwestern University

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