During this period of Great Inflation, the Fed failed to meet its mandate to keep inflation at steady and moderately low levels, thereby plunging the country into former financial difficulties.
Part 4. The Fiat Era of Money
In the previous posts, we’ve discussed factors leading up to the Great Inflation which, as you know, was a period of turbulence in the US during the 1960s and 1970s. So what of the calm after the storm? Was there any? Fortunately, yes!
During the Great Moderation, there were still many financial shocks, but they didn’t crash the economy.
From the late 1990s until early 2006, house prices in the US soared. During this surge, mortgage lending standards deteriorated significantly and alarmingly.
The financial world, or more accurately, the world at large, was never the same after the 2008 financial crisis. If it were not for the crisis, Bitcoin would not have become as popular as it has become.
The panic of 2008 threatened the stability of the global financial system at large, necessitating a large-scale intervention by the Fed.
As you can undoubtedly tell from your reading thus far, the global financial crisis revealed the weaknesses in the financial system and the need for better regulation.
Below are a series of charts (put together by River Financial), which showcase various economic metrics pre- and post-1971.