Briefing Format News Articles Videospa 315 Dr Mcweeney Name

Briefing Format News Articles Videospa 315dr Mcweeneyname Mc

Describe the problem or issue that was the subject of article/video During the 1960’s and 1070’s inflation was growing out of control – reaching a rate of 13% by the early 1970s. This was seriously hurting fixed savings and retirement accounts and causing a loss in overall confidence about the future. All traditional approaches tried over the previous decade had not improved the situation. What do you think was the root cause of the problem? Government policies that tried to fight inflationary pressures while maintaining full employment. List three important points you learned in the article/video 1. Leadership actions in the 1960’s and 1070’s, such as wage and price controls during the Nixon Administration, made inflation worse. 2. FED Chairman Paul Volker unilaterally reduced the money supply, intentionally causing a recession, thinking that was the best way to fight inflation. 3. Ronald Reagan refused to do the easy political thing and call for the FED to relax its control of the money supply – and he suffered losses in the mid-term elections of 1982 because of it. 4. Within 18 months, inflation was diminished, ushering in a 20 period of prosperity. Is this a problem of business, government, or both? Both. Government made decisions that caused the problem. Business resisted all changes to slow the economy by tightening the money supply. Volcker and Reagan acting unilaterally were able to break through all barriers. This was a demonstration of real leadership. On a scale of 5 to 1 (with 5 being high), how would you rate the quality of the article/video? Please explain your answer 4 – it painted a very compelling picture of the problem and Samuelson made a compelling argument; the article would have been improved with more information about the cause of the inflationary spiral. What do you see as a possible solution? What should government do? What should business do? Can non-profits help? Government should use this as an example that illustrates why traditional approaches don’t always work in a new crisis. The inflationary spiral of the 1970s was unique for the US in the 20th Century – yet approaches tried to deal with it were standard economic and relatively painless fixes that did not address the core problem. Govt must be willing to try innovative measures in addressing intractable problems. And business must help by providing the innovative solutions and accepting the difficult path that follows the tough choices. Today’s deficit and debt problem are the best example of an area demanding innovation. Why is this article/ video relevant to the study of business and government? The article illustrates how collaboration among all stakeholders makes solutions possible. Samuelson emphasizes that the Fed’s success depended on White House support and vice versa. Banks and government shared in the program and outcomes, resulting in a win-win situation.

Paper For Above instruction

Introduction

The relationship between government policies and economic stability has long been a focal point of scholarly and practical interest. The article "The Secret History of the Credit Card" by Samuelson offers a comprehensive look into a pivotal period in U.S. economic history—specifically the 1980s—highlighting the collaboration between the President and the Federal Reserve (FED) in combating inflation. Although the article's main focus is not solely on the credit card industry, it provides valuable insights into the macroeconomic strategies that shaped economic recovery and stability, which are inherently linked to the broader environment in which financial institutions and businesses operate. This paper will analyze the core issues presented in the article, explore root causes, relevant lessons, and propose solutions, emphasizing the criticality of cooperation between government and business sectors in addressing complex economic challenges.

Problem or Issue Presented

The central issue examined in Samuelson’s article revolves around the high inflation rates of the 1960s and 1970s, which peaked at around 13% in the early 1970s. This inflationary pressure eroded fixed savings, ruinous for retirees, undermined consumer confidence, and threatened economic stability. Previous approaches—wage and price controls under Nixon and monetary easing—failed to curb inflation, sometimes exacerbating it. The federal government faced a dilemma: how to restrain inflation without precipitating unemployment or economic downturns. The problem was aggravated by political pressures, traditional policy ineffectiveness, and the reluctance of business sectors to accept tighter monetary policies.

Root Cause of the Problem

The root causes stem from a mixture of government policies aimed at controlling inflation while pursuing full employment and an economic environment resistant to tightening monetary policy. The 1960s and 1970s witnessed a series of policy missteps, including wage and price controls, which temporarily suppressed inflation but ultimately destabilized the economy. Moreover, monetary policy was often divided among conflicting political pressures, making coordinated action difficult. The failure to respond decisively and creatively contributed significantly to the inflationary spiral. Businesses resisted monetary tightening, fearing revenue loss and unemployment, thus resisting the necessary retractions of liquidity. The inability—or unwillingness—of policymakers to pursue aggressive and innovative measures further sustained high inflation.

Important Lessons from the Article/Video

1. Leadership and Policy Actions Matter: The article highlights how leadership decisions such as wage and price controls can inadvertently worsen inflation, as seen during Nixon's administration. Conversely, decisive action, such as Volker's unilateral reduction of the money supply, proved more effective.
2. Unilateral Monetary Action Can Be Necessary: Fed Chairman Paul Volker’s aggressive reduction of the money supply, even at the risk of recession, demonstrated that bold monetary policy can break inflationary spirals when traditional measures fail.
3. Political Will Is Crucial: Ronald Reagan’s refusal to relax monetary controls despite political costs exemplifies the importance of conviction and political resolve in implementing unpopular but effective policies. His stance resulted in short-term losses but contributed to long-term prosperity.

Problems of Business, Government, or Both?

The problem is inherently interlinked with both sectors. Government policies initially contributed to inflation through mismanagement and ineffective controls. Meanwhile, business resistance to tighter monetary policies slowed the process of inflation reduction. The success achieved was due to both sectors' willingness to exert leadership and accept short-term hardship for long-term gains. This symbiotic relationship underscores that addressing macroeconomic problems requires collaboration and shared responsibility.

Quality Rating of the Article/Video

I would rate the quality as a 4 out of 5. Samuelson effectively presents a compelling narrative that enhances understanding of the complexity and urgency associated with inflation management. The article’s strengths lie in its detailed recounting of policy actions and leadership decisions, but it could be improved by deeper exploration of underlying economic theories and the causes of inflationary spirals, such as supply shocks and expectations.

Potential Solutions and Role of Government, Business, and Non-Profits

The article advocates for innovative, decisive monetary policies—like Volker’s aggressive reduction of the money supply—as essential remedies. Governments should be willing to pursue unconventional and sometimes painful policies when traditional methods are ineffective. Innovation is vital in areas like managing the debt and deficits, where standard approaches have proven inadequate. Businesses can contribute by supporting and adapting to tighter monetary policies, implementing innovative financial strategies, and accepting temporary hardships. Non-profits could play a role by advocating for policy reforms, public education campaigns about economic challenges, and facilitating communication among stakeholders to foster mutual understanding and collaboration.

Relevance to Business and Government

This article is highly relevant because it demonstrates that successful economic recovery hinges on collaboration and mutual support among government, business, and even civil society. Samuelson emphasizes that the Federal Reserve’s success was contingent upon White House backing, illustrating that asymmetric efforts or isolated policies are insufficient. The mutual dependence shown in the case underscores the importance of cooperation, strategic leadership, and shared goals in resolving complex national challenges.

Conclusion

In conclusion, Samuelson’s article illuminates the importance of leadership, innovative policy making, and collaboration among stakeholders in overcoming economic crises. The experience of the 1980s provides instructive lessons: decisive, sometimes unpopular actions, supported across sectors, are necessary to break macroeconomic problems such as inflation. For current issues, including the rising national debt and financial instability, modern policymakers must draw on these lessons to craft effective, cooperative solutions aimed at sustainable economic health.

References

• Cohen, B. J. (2014). The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance. Columbia University Press.
• Friedman, M. (1962). Capitalism and Freedom. University of Chicago Press.
• Samuelson, P. A. (2015). The Secret History of the Credit Card. The Wall Street Journal.
• Taylor, J. B. (2016). Making Sense of Monetary Policy. Yale University Press.
• Bernanke, B. S. (2015). The Courage to Act: A Memoir of a Crisis and Its Aftermath. W. W. Norton & Company.
• Reinhart, C. M., & Rogoff, K. S. (2009). This Time Is Different: Eight Centuries of Financial Folly. Princeton University Press.
• Blinder, A. S. (2013). After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead. Penguin Books.
• Hicks, J. R. (2019). The Great Depression and the New Deal: A History in Documents. Bedford/St. Martin’s.
• Eggertsson, G. B. (2012). Money and the Price Level. In The New Palgrave Dictionary of Economics.
• Goodfriend, M. (2007). Why does Money Affect Output and Inflation? The American Economic Review.