Reaganomics

Economists were vexed during the 1970s, as unemployment and inflation rose together to stifle economic growth and all forms of investment. The Keynesian Phillips-curve paradigm, whereby employment and inflation are supposed to move in opposite directions, completely broke down. The Ivy League formula of increasing the money supply to spur growth, and high taxes to hold back inflation, had failed utterly.

Between the late 1960s and 1980, the U.S. inflation rate rose from 2 percent to 14 percent, while the unemployment rate gradually drifted higher, from 4 percent to almost 10 percent. It was a period of decline for the country. Americans were demoralized.

About the Author

Larry Kudlow

Larry Kudlow is the author of JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

Economists were vexed during the 1970s, as unemployment and inflation rose together to stifle economic growth and all forms of investment. The Keynesian Phillips-curve paradigm, whereby employment and inflation are supposed to move in opposite directions, completely broke down. The Ivy League formula of increasing the money supply to spur growth, and high taxes to hold back inflation, had failed utterly.

Between the late 1960s and 1980, the U.S. inflation rate rose from 2 percent to 14 percent, while the unemployment rate gradually drifted higher, from 4 percent to almost 10 percent. It was a period of decline for the country. Americans were demoralized.