Many of us will recall the powerful motivational ramifications of the Great Depression on American voters. Franklin D. Roosevelt’s crushing victory over Herbert Hoover in November 1932 bore witness to this tumultuous period of economic history .
Roosevelt’s response was swift, taking urgent action to end the nation’s suffering. This was manifested in the “hundred days” initiative, incorporating a comprehensive reform program and measures for economic relief.
The actions of the New Deal in its early years saw some success amidst initial friction from the Supreme Court, yet by 1936 the Great Depression was far from over.
Despite this challenging situation, Roosevelt managed to secure his 1936 reelection and went on to make significant strides in definitively ending the Great Depression. Nevertheless, the ongoing inflation struggles of the Federal Reserve, while considerably less severe, will likely find its place in history amongst a small group of economists and policy experts.
A curious statistic to note may be the Republican members of Congress’ mention of higher than usual inflation an average of 77 times a day. This behavior suggests a lack of substantial issues to address more than any implications about monetary policy.
To combat inflation, the Federal Reserve has one core strategy in its toolkit: rate hikes. As the inflation rate exceeded the 2% target set by the Fed, the Central Bank increased interest rates in response.
Careful execution of this strategy was central to avoid disastrous effects on the economy. Despite persistent inflation, the Federal Reserve has made considerable strides considering the slow pace at which changes in the U.S. economy take effect. The recent Consumer Price Index shows this, revealing that prices were flat on a month-over-month basis, a result better than most economists had predicted. This encouraging news led to a surge in the stock market and the S&P 500 achieving its best day since April.
Despite these promising signs, future interest rate hikes by the Federal Reserve remain a speculative subject. Interest rates are likely to remain relatively high until inflation reaches the Federal Reserve’s 2% target; however, with the favorable trends, discussions around inflation are expected to wane by next fall. With this in mind, Republican lawmakers are reconsidering their strategy of calling attention to inflation in their electoral campaigns.
In conclusion, though we may lack the patience of our 1930s counterparts, the fight against inflation does not require us to maintain an indefinite course. The Federal Reserve’s effective management of inflation should remind us that public service is often quietly performed rather than widely celebrated.
Article contributed by Jonathan Wolf, civil litigator and author of Your Debt-Free JD. Views expressed are his own and do not reflect any affiliated organization. He can be reached at jon_wolf@hotmail.com