1980 s Double Dip Recession
1980’s Double Dip Recession Overview
I. Introduction
The 1980-1982 Double Dip recession brings up the curiosity of how the stagflation of the seventy’s affected the early eighty’s in which it caused the Fed and the USA congress to be switching back and forth from stimulus and restraints causing us to fall to our first recession. Then not till later we will see that Paul Voucher Chairman of the Board of Governors use heavy monetary restraints to control the inflation and ending the first recession only to ending up pushing us back into the second recession of our Double Dip.
II. Cause of the Recession The high inflation rates that started climbing since the year of 1976 was one of the underlying components of the first recession in 1980 it forced the hand of the Fed and Paul Volcker to start driving up interest rates to new highs trying to keep inflation rates to a more stable condition. The increase in driving up high interest rates created an increase in unemployment due to their inversely relationship this created us to enter our second dip of the recession. The inflation was under control by the time we entered the year of 1982 but the cost of getting our inflation rate from 13.3% in the year of 1979 back to a stable number of 3.8% in the end of 1982 was tremendous since unemployment roused to a staggering 10.8% in the year of 1982 (course syllabus). This inflation problems that started since the 1950’s when the inflation rose to 3% due to the Korean war and up to 4.7% in the 1960’s due to Vietnam involvement foreshadowed the growing impediment of the inflation rate slowly growing faster and at a rate in which the Fed could not easily control and the Fiscal policy makers ignored (http://www.nber.org/chapters/c7753.pdf)
The indecision of the Fed to be able to attack either the Unemployment or the Inflation was also a factor since their action to switch back and forth to try and control both made the problem worsen. So by the time came when they decided to
I. Introduction
The 1980-1982 Double Dip recession brings up the curiosity of how the stagflation of the seventy’s affected the early eighty’s in which it caused the Fed and the USA congress to be switching back and forth from stimulus and restraints causing us to fall to our first recession. Then not till later we will see that Paul Voucher Chairman of the Board of Governors use heavy monetary restraints to control the inflation and ending the first recession only to ending up pushing us back into the second recession of our Double Dip.
II. Cause of the Recession The high inflation rates that started climbing since the year of 1976 was one of the underlying components of the first recession in 1980 it forced the hand of the Fed and Paul Volcker to start driving up interest rates to new highs trying to keep inflation rates to a more stable condition. The increase in driving up high interest rates created an increase in unemployment due to their inversely relationship this created us to enter our second dip of the recession. The inflation was under control by the time we entered the year of 1982 but the cost of getting our inflation rate from 13.3% in the year of 1979 back to a stable number of 3.8% in the end of 1982 was tremendous since unemployment roused to a staggering 10.8% in the year of 1982 (course syllabus). This inflation problems that started since the 1950’s when the inflation rose to 3% due to the Korean war and up to 4.7% in the 1960’s due to Vietnam involvement foreshadowed the growing impediment of the inflation rate slowly growing faster and at a rate in which the Fed could not easily control and the Fiscal policy makers ignored (http://www.nber.org/chapters/c7753.pdf)
The indecision of the Fed to be able to attack either the Unemployment or the Inflation was also a factor since their action to switch back and forth to try and control both made the problem worsen. So by the time came when they decided to