1970s economics situation compared to today's economic situation.?

Question

In the 1970's, the federal government was burdened with debt from the Vietnam War, I believe this debt caused the government to borrow money, which drove up interest rates. We now have huge federal deficits from the Iraqi war. I thought that, with the fedral government borowing money, this situation would drive up interest rates. What is different about the current situation verses that situation in the 1970s that allows interest rates to remain low?

Answer 1

Double digit inflation. The 70s were awful.

Answer 2

Keynesian's were responsible for the 70's stagflation. The model 'failed' to predict both high unemployment and high wages which equated to high spending, so the "classical" economists say. In fact, classical didn't see the great depression coming. Ironic, but Keynes actually is a good model, IF used the way it's designed. Your question is sort of shot gun. First consider we're working under a monetarist system. Basically, it's the amount of supply of money on the market. In terms of debt, we've always enjoyed some measure of debt. The issue isn't a deficit so much as 'do we have the ability to cover our debts, especially bonds due on the open market.' The world does recognize our ability to have debt, but also to keep the debt within arms reach. Inflation is actually a greater threat then a deficit. Raising interest rates is A way, but they easiest is to increase federal reserve holdings and SELL bonds to collect money back into the Fed vaults. Raising/lower taxes, raise/lower G-spending, raise/lower Interest rates....Export-Import...is the formulas most look at in deciding how to effect the economy. Don't think I answered your question but your asking questions related to two very different economic models.

Answer 3

they want to play til the game is over there is no linear scale of projections after 911-all who stole being CEO are numbered in the thousands who would sack their corporations to get out now, the model is vertical and the climb is the economy, and it will toppal as it is corrupt, that is why the industries are getting away with murder, the government know that the immigrates are taking the profits to a level that will give them the growth that has been denied since 911, but they can't do it paying Americans to do it, so the illegal government that we believe in is screwing the hell out of everyone trying to scramble to a survival mode and they can't deal with the past cause they can't get back, end game is all there is and osama know and u know and so does everybody else the boomers are turning 50 at the rate of 8000a month or some redicules number and they have given all they can and they are going to get stuck in the back on the way out too and if i say to much it won't get printed either

Answer 4

The latter 70s have been characterised via intense inflation besides as gradual actual improve. a common 20 12 months loan in 1980 could have been 12%. you ought to get a 5 12 months CD for 15% via 1980. there grew to become into additionally a improve in nominal housing fees, however no longer as large because of the fact the 1997-2007 decade.

Answer 5

In the 70's, we had what was called "stagflation" because we had high inflation, but the economy was in recession or flat.

Today we have been increasing our borrowing, but our national economy has also been growing. We pay more in interest, but we have more tax revenues to do that.

In fact, if you graph out the trends tax revenues and deficits, we are on a trend to a balanced budget in late 2008 or early 2009.