When in US Economic history did this ever happen.....?

Question

Here's the situation: The Fed raises or lowers interest rates based on how the economy performs. Typically, if the economy is doing very well, the Feds will carefully raise rates in an effort to slow down the economy (aka. soft landing) and head off inflation. If the economy is doing poorly, the Feds will lower rates in an effort to "jumpstart" spending (ex: September 11, 2001) and improve the economy. Question: when has it ever happened that the economy did so well that inflation spiked so high that it caused a real problem?

JP, thanks for your reply but I was in high school in '80 and remember the high inflation. But I also remember that the economy pretty much sucked back then too; so it wasn't an roaring economy that caused the high inflation.

Answer 1

I just saw a chart with the U.S. inflation rate since 1945 and in about '46 inflation was at almost 15% and again in '80.

Answer 2

I don't know if this is exactly what you are looking for but President Carter during the last half of the 1970's presided over an inflation rate that reached the upper teens. I was in the Air Force at the time. Military doesn't make a real plush living anyway and to watch your purchasing power drop 1.5 - 2% a month was very disheartening.

You may want to determine exactly when the Fed was established. I think it wasn't there during the depression of the 30's. Could be wrong on that one but I would check.

If you are only interested in the US just ignore the rest of this paragraph. While studying WWII I found that Hitler was just printing money with consideration for what it was worth or what if anything was backing it. As I understand the situation, workers were being paid every day and they spent the money on the way home because its value would decrease several percent over night. Now that is runaway inflation.

I hope I did you some good.