History holds out its wisdom to those who ignore its teachings. Forty years ago this month, the President’s fiscal policy Ronald Reagan and the monetary policy of the Federal Reserve Chairman Paul Volcker broke the backbone of the most destructive inflation of the 20th century, ushered in an economic expansion that effectively lasted a quarter of a century, and banished inflation—until now.
The build-up to the Great Inflation began in 1966 when Congress, at the urging of the Johnson administration, expanded funding for both the Vietnam War and the War on Poverty. This “guns and butter” policy led to a double-digit increase in federal spending. By 1973, inflation was 8.7% and would average 9.2% for nine years – far surpassing the average inflation of 3.3% between 1946 and 1972 and 2.7% from 1982 to 2019. Federal revenues increased by an average of 4.1% per year. The national tax share of the federal government rose by almost an eighth from 17% to 19.1%.
https://www.wsj.com/articles/lessons-from-the-great-inflation-of-1973-81-volcker-reagan-guns-and-butter-bracket-creep-tax-revenue-spending-monetary-policy-11659448515 Lessons From the Great Inflation of 1973-81