Here’s what a 1970s inflation-fighting fiasco says about the battle against rising prices

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Rising inflation is bringing back memories of the 1970s, but not doing much to boost the value of a piece of political memorabilia that is an artifact of an unfortunate battle against rising prices.

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Art Hogan said he scrambled last month to find the “Whip Inflation Now” or Win, button. NS. Riley National’s chief market strategist said he wears the button, which he bought on eBay for less than $10, during a video call with financial advisors to help allay concerns that prevailing price pressures had been around since the 1970s. The stagflation that came to define the decade. ,

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But the ironic interest in red-and-white buttons mass-produced as part of a public-service campaign launched by President Gerald Ford in 1974, and widely seen as a flop, caused the mementos to become inflation-like. not likely to turn into anything

“They don’t sell for a lot of money,” said Curtis Lindner, director of Americana at Heritage Auctions, a Dallas-based auction house. “At one time they were very popular among collectors.”

Stagflation redux?
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As for inflation, Hogan said the comparison to the 1970s is not surprising, with the consumer price index reaching a nearly 31-year high of 6.2% in October. But like many investors and economists, Hogan argues that the similarities are only skin deep.

After a supply shock caused by OPEC quadruple crude oil prices, the 1970s saw an even greater pull in double-digit US inflation than the year before, while unemployment also rose and the economy set up – a Such a condition became known as “stagflation”. Conversely, current inflation growth is due in large part to rising demand for goods as government stimulus payments helped the economy bounce back from business shutdowns during the pandemic that also caused some supply chain disruptions.

“It was inflation, with no economic benefit,” Hogan said in a phone interview last week about the 1970s. Now, inflation is rising “as demand bounces back faster than supply” in the wake of the shutdown due to the COVID-19 pandemic.

Dow Jones Industrial Average DJIA,
-0.30%
fell almost 28% in 1974, while the S&P 500 SPX,
-0.17%
In 1975 both gauges dropped by about 30% before rebounding sharply. According to Datatrack Research, the stock saw a negative 11.6% real return in the high-inflation period from 1969 to 1982.

The Dow is up over 17% to date, while the S&P 500 SPX,
-0.17%
With the major indices setting several records during 2021, there has been an increase of about 25%.

Why the hottest inflation in 3 decades isn’t troubling stock market bulls

This does not mean that inflation is not a concern. Although many economists emphasize differences between the 1970s and now, there is debate as to how quickly those inflationary pressures are likely to subside.

High inflation is eating away at the budget of American households

political toll

Inflation can be costly for politicians. President Joe Biden’s approval ratings have been affected, with a Washington Post/ABC News poll released on Sunday showing that 55% respondents rejected In terms of handling the economy, it is 6 percentage points higher than former President Donald Trump’s worst performance in September 2017.

‘We will see lower prices’: Biden says passage of his agenda will contain inflation

Ford was feeling the heat in 1974. Win buttons were introduced in October as inflation accelerated in the wake of the first Arab oil embargo; Consumer Price Index grew at an annual rate of over 11% in that year. With the economy in slowdown, Ford, in a speech, proposed a number of measures aimed at reducing inflation, including removing acreage limits on many crops and overhauling energy regulations.

But the heart of the effort, and the one most remembered today, was Ford’s description of the fight against inflation as a moral battle, comparing World War II domestic efforts to helping citizens spend less and spend more. To encourage saving.

“Every housewife knows almost exactly how much she spent on food last week. If you can’t save a dime from your food budget—and I know there are many—of course you can cut 5% of the amount of food you waste,” Ford said.

Needless to say, this effort had little effect. Inflation could not be contained until the early 1980s, when Paul Volcker led the Federal Reserve to ruthlessly raise interest rates to double-digit levels, triggering a deep recession.

The performance of the economy was blamed for Ford’s election defeat to Jimmy Carter in 1976. Carter, who had appointed Volcker as Fed chairman, would lose his 1980 re-election bid to Ronald Reagan, a defeat also partly blamed on inflation and other economic conditions. Difficulty

‘Unbelievable stupidity’

As for the WIN campaign, it largely ended by Christmas 1974 as the recession deepened. Even Ford’s economic advisers later denounced the effort.

In his memoirs, Alan Greenspan, who was then chairman of the White House Council of Economic Advisors and would serve five terms as chairman of the Federal Reserve, presented the campaign to Ford’s speechwriting team at a senior staff meeting. Recalled: “I was the only economist present, and I said to myself, ‘This is unbelievable stupidity. What am I doing here.'”

The campaign left behind a substantial supply of memorabilia, including red and white buttons emblazoned with the “WIN” logo. Many buttons were distributed for free. Pins can be obtained simply by mailing a form to the White House, printed in newspapers, consenting to join the fight against inflation.

Inflation fighters can also don sweaters, swig from coffee cups or even play football with the VIN logo, often produced by companies hoping to capitalize on government campaigns. were done.

‘Slow movers’

Hogan, who began collecting political mementos as a child, said he vainly searched for Win Buttons he acquired in the 1970s, eventually moving to eBay. Finding them is not difficult. Despite renewed inflation concerns and ironic nostalgia, Vin memorabilia isn’t exactly in vogue.

There has been a “modest pickup” in Button purchases, but they remain “slow movers,” said Steve Ferber of Lori Ferber Collectibles, a Scottsdale, Ariz.-based political collectibles dealer.

ebay on ebay,
+0.97%,
Meanwhile, Win Button listings surged earlier this year, but sales declined by about 40% in the third quarter, according to data provided by the auction site.

“I don’t know if this has struck more or less a chord with collectors than with the general public,” Ferber told Businesshala. “Gerald Ford is, in general, one of the least collected presidents in the modern era.”

Ferber said he has about 1,000 buttons in stock, noting that they tend to run for less than 50 cents in bulk, while individual buttons rarely sell for more than $10.

Incandescent collectors aside, what do economists do about the effort nearly a decade and a half later?

William Polley, associate professor of economics at Western Illinois University – Quad Cities in Moline, said that although the campaign clearly failed, the rationale behind it was not “utterly misguided”.

“Their thinking was in the right place, but I think they underestimated the ability of consumers to actually follow and do it,” he said in an interview.

In the end, asking consumers to walk to work and waste less food was not a match for M2 Money stocks, a measure of the money supply including cash, check deposits and easily convertible near-money assets, which are double-digit. The rate was increasing, Polly said.

volunteers

The volunteer approach at the heart of the WIN campaign should also be seen in relation to more interventionist efforts to reduce inflation, and including wage and price controls instituted by President Richard Nixon in 1971 that failed, said Rebecca Spang, of Indiana University in Bloomington. Professor of History.

In contrast, the volunteer-focused victory campaign reflects a “very deep suspicion” by Ford and his advisers “that the government could have done anything,” she said in an interview.

In the meantime, investors probably shouldn’t expect to see a lasting jump in the value of the Win Button, regardless of what happens with inflation in the near term, said collectibles dealer Ferber, although they offer a basic lesson in economics. Ultimately, he said, making a collectible valuable requires two things — scarcity and demand.

“They are certainly not rare,” he said, “and there is no tremendous demand.”

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