Shock values Prices and inflation in American democracy

Carola Conces Binder

Book - 2024

"How inflation fears shaped American society, then and now. For most of its history, the United States has benefited from price stability--a steady relationship between supply and demand, characterized by prices that don't inflate or deflate in unpredictable fashion. Across these long stretches, the US economy became famously free-market: prices did the job of stabilizing the economy so the government didn't have to. In this sweeping and revelatory history of American economy and democracy, Carola Conces Binder shows that American price-stability is no accident. From its colonial origins to today, the American state has been designed for, and continues to be shaped by, an unlimited effort to insulate the economy from the dang...ers of price fluctuations. Binder narrates an American history in which inflationary anxiety has informed everything from the reluctant establishment of paper money to the rise of the modern Federal Reserve as an omniscient actor in public policy. At every step, and with each historical brush with monetary instability, the US has been reinvented as a response to its most recent failings. Shock Values is the epochal history of the US as a monetary state. Binder recounts both the monetary interests at the dawn of the Republic; its decades-long experiments with price controls; the outsize role of agriculture and industry in its monetary apparatus; and how the rise of the all-powerful Federal Reserve was born out of crisis more than anything else. Expansive and erudite, Shock Values is a watershed telling of an old history: how American union's pledge to be more perfect was drawn along monetary lines. It is not to be missed"--

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  • Introduction
  • 1. The Colonies and the Revolution
  • 2. Financing the New Nation
  • 3. The Jacksonian Era and the Civil War
  • 4. The Money Question in the Postbellum Era
  • 5. The Federal Reserve Act and World War I
  • 6. Deflation and Stabilization
  • 7. The Great Depression and the New Deal
  • 8. World War II and the Office of Price Administration
  • 9. The Korean War and the Treasury-Fed Accord
  • 10. The Great Inflation
  • 11. The Volcker Disinflation and the Greenspan Standard
  • 12. Inflation Targeting and the Great Recession
  • 13. The Pandemic and the Return of Inflation
  • 14. Looking Back and Looking Ahead
  • Notes
  • Index
Review by Library Journal Review

Binder (economics, Haverford Coll.) examines the economic destabilization caused by fluctuations in the cost of goods and the effective--and often controversial--remedies the American government has historically used to steady the market, plus their lasting effects. Her book begins with the challenges U.S. colonists faced in controlling prices while financing the Revolutionary War and establishing a new nation. Postbellum politics then shifted to creating best practices for managing national and local economies. This meant establishing the federal system for government and the Federal Reserve (to stabilize the economy). During the Great Depression of the 1920s, the government took an aggressive stance to increase prices, decrease the recession, and avoid deflation. In the 1960s, there was a crisis of soaring prices for steel and other materials. To stem the resulting inflation, President Kennedy and Federal Reserve Chair Paul Volcker (and later Alan Greenspan) raised the prices of goods. Binder also covers the current moment, in which, in reaction to the COVID pandemic, the government regulated the rising costs for drugs and other commodities. VERDICT A solid history of American economic policies. Add to business and economics collections.--Claude Ury

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