The Golden Age Of Capitalism - 1022 Words

The decades following the Second World War, often referred as the â€Å"Golden Age of Capitalism,† brought an immeasurable amount of prosperity to the United States economy. Real GDP per capita grew at 2.25 percent per year, along with a large number of American citizens entering the middle class with the ability to enjoy benefits from rising wages and home ownership (Palley 1). It seemed as though there would be no end to this post-war economic boom; however, the â€Å"Golden Age of Capitalism† would abruptly end at the onset of the seventies with a variety of factors contributing to economic downturn. The lengthy expansion during the sixties was brought to end due to rising inflation, with the annual consumer price inflation up to six percent†¦show more content†¦Inflation continued to remain as an issue, not falling nearly as advisers expected (Madrick 58). Martin was fired by President Nixon, after refusing to play with politics throughout his tenure as Fed eral Reserve Chairman. In November of 1970, Arthur F. Burns was appointed by Nixon to succeed Martin (Abrams 177). Although qualified, Burns would soon be subjected to orders from Nixon, who wanted to resolve the inflation issue and make the economy seem strong to voters in the upcoming re-election (Bresiger 1). In order to counter stagflation, Nixon began to implement a series of economic measures known as the Nixon shock. Nixon first suspended the convertibility of dollars to gold and officially closed the gold window. This would cause the American dollar to devalue, stimulating American exports as a result but further contributing to inflation with increase prices on imports. Nixon’s second measure was to impose a wage-price freeze over a period of ninety days, which restrained inflation and allowing most prices to remain constant (Madrick 59). With inflation temporarily under control, Nixon began implementing an expansionary policy to stimulate the economy out of a recession. Nixon began raising Social Security benefits, increasing business tax credits on business investment, and reducing personal tax rates for individuals. Burns pushed for a lower interest rate, decreasing from 5.5 percent to 3.25 percent (Madrick