this is the world of stagflation. unfortunately, when we tried to adjust to this world, we sometimes did things that made our problems even worse. in 1973, food shocks and oil shocks battered the economy, and stagflation settled ov the land. was e federal govement any better ppared to face e tough challenges ahead an business or labor had been? coming out of the 1960s, inflation was the nation's number-one economic problem. president nixon and his economic advisors grappled with this vexing puzzle unsuccessfully. finally, they instituted an extreme measure -- wage and price controls. but when the economy was shaken by the food and oil shocks the wage and price program fell apart and inflation continued its upward spiral. for most of 1973, employment remained relatively high and it was natural for government leaders and economists to think that the problem of inflation was due to excessive demand. why were the signs misleading? stanley fisher professor of economics at the massachusetts institute of technology. at the e

why couldn't the government achieve significant success against the ravages of stagflation?te 1990s, the economy was booming.

stagflation, a problem we'll consider in a future edition of economics usa. this is david schoumacher. captioning made possible by the annenberg/cpb project captioning performed by the national captioning institute, inc. captions copyright 1986 educational fi center annenberg media ♪ for information about this and other annenberg media programs call 1-800-learner and visit us at www.learner.org. annenberg media ♪ annenberg media ♪ for information about this and other annenberg media programs call 1-800-learner and visit us at www.learner.org. annenberg media ♪ one of its major banks, the knickerbocker trust, closes. one man commits suicide. the banking system nearly collapses. what is it about banking that could lead to such a calamity? inhe92, the banking system helped spread prosperity. inhe92in t 1930s, it dragged americaown. how could a holiday put an end to the deepening crisis? banking deregution cost taxpaye almost a half trillion dollars. did banks need more regulation or less? our nation has long tried to protect the banking business, but we've never

inverse stagflation, who knows.n you look at forward curves and interest rate products specifically they're not pricing in inflation now. david: inverse stagflation. that is new phrase to me. go ahead, sandy. >> dave, i was just going to point out, everybody should take note where the yield on the 10-year is right now. it is at 2.85%. remember just a couple weeks ago we were above 3%. so that is likely going to be the thing to watch tomorrow. liz: i think sandra's right but not necessarily for commodities purpose. much watch the u.s. dollar. any kind of lessening of fed involvement is dollar positive. it is bullish for the dollar. got to watch that more. we will for all our viewers. larry shover, sandra smith. great to have you. david: house speaker john boehner struggle to win the budget battle may have gotten a whole lot more difficult after a blunt new warning from the congressional budget office. we'll bring you the latest live from capitol hill. liz: the house that jamie dimon built, jpmorgan chase, could be sl

you have something called stagflation. you also have social and political upheaval, watergate do we not an energy crisis to do. fuel, oil, gas than it ever had been. around this time people do studies to expose the myth of the middle-class. the numbers suggest we are more of a working-class nation in the middle-class nation. it's more working class actually. one very reliable study had 57% working class defined by occupation incomes and middle-class. people start realizing the middle-class nation is a myth, that it's basically reinforced by tv shows her most everybody is in a class and advertising. so the emperor starts wearing no clothes. around this time the mythology becomes exposed. whether they keep workers be realized is that college education becomes really an affordable for middle-class parents. tuition is going up very quickly the government changes the rules of that guaranteed student loan program, so many middle-class families who could get lots no longer can. davis later changes, but it began as early as that.