Cost-Push Inflation

finance a la shmoop what is disinflation disinflation often confused with dat

inflation refers to the decline in inflation rates over time in 1973

America was fully juiced with Warbucks from Vietnam inflation hovered around [soldiers firing weapons]

the mid going on high single digits and then higher from there like 7% or more

depending on where you look him and Jimmy Carter stepped in on this guy and [Carter walks into office]

raised the federal rates the Fed rates their massively stamping out the wild

bull economy and putting the brakes on inflation but it didn't happen until

after Carter was actually out of office and Reagan took over inflation [Reagan replaces Carter in office]

eventually had rocketed all the way up to about 14 ish percent on an annualized

basis looking at the monthlies in the 1980-81 period right here

well the crux of dis inflation is that inflation is still positive it's just

becoming well less positive and or like you know how you feel not long after you

say I do and the honeymoon is over and you have to take out the garbage so

under Carter the US inflation rates were attacked in a variety of ways the [Carter in a boxing ring]

biggest of which was to make the cost of renting capital very expensive which

cooled the economy but it took a long time like note how slowly inflation

rates came down and well really it was decades before things fully stabilized

you can see how things slowly disinflation the raging levels that

peaked at post-vietnam era 1314 percent then slid all the way down to a 1 to 3

percent way down there where it's hovered for a

while so that's disinflation still inflation but just less of it deflation [Disinflation deflating]

is when inflation turns negative like prices are actually declining and yes

we've had periods of deflation before albeit very short ones like in the post

mortgage crisis Mallove's in 2009 right here yes yes it's rare but it happens

got it okay class dismissed