PK narrates the spiraling 70's and lo and behold no colander MAP no pigou inflation tax

when the spiral of output prices driven by wages chasing COL
 and profits maintaining margins ..got insufferable

the answer to "the spiral" was at hand
weintraub or lerner :

a pigou tax or a warrant market

but
instead we got Volcker


"In elite mythology, the origins of the crisis of the 70s, like the supposed origins of our current crisis, lay in excess: too much debt, too much coddling of those slovenly proles via a strong welfare state. The suffering of 1979-82 was necessary payback."


"None of that is remotely true."

well that's a relief eh comrades!


"There was no deficit problem: government debt was low and stable or falling as a share of GDP during the 70s. "

"Rising welfare rolls may have been a big political problem, but a runaway welfare state more broadly just wasn’t an issue — hey, these days right-wingers complaining about a nation of takers tend to use the low-dependency 70s as a baseline. "

okay nouigh spoonheading :

"What we did have was a wage-price spiral:"

" workers demanding large wage increases (those were the days when workers actually could make demands) because they expected lots of inflation, firms raising prices because of rising costs, all exacerbated by big oil shocks. It was mainly a case of self-fulfilling expectations"

" the problem was to break the cycle."


"So why did we need a terrible recession? "

"...simply as a way to cool the action. "

"Someone — I’m pretty sure it was Martin Baily — described the inflation problem as being like what happens when everyone at a football game stands up to see the action better, and the result is that everyone is uncomfortable but nobody actually gets a better view."

come the double camel clutch submission hold
aka:  the  volckerdammerung

," stopping the game until everyone was seated again."

"this timeout destroyed millions of jobs and wasted trillions of dollars."


"Was there a better way? "


"Ideally, we should have been able to get all the relevant parties in a room and say, look, this inflation has to stop; you workers, reduce your wage demands, you businesses, cancel your price increases, and for our part, we agree to stop printing money so the whole thing is over. That way, you’d get price stability without the recession. "

" America wasn’t like that, and the decision was made to do it the hard, brutal way."

" This was not a policy triumph! It was, in a way, a confession of despair."


.

"60-year-old men should remember that a decade after the Volcker disinflation we were still very much in a national funk"