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→Economy and budget
Carter increased government spending. However, when [[inflation]] skyrocketed in 1978 he changed his mind. He delayed tax cuts and vetoed the spending programs that he himself proposed to the [[Congress]]. Carter then tried to ease inflation by reducing [[money]] supply and raising [[interest rates]]. All of his efforts proved to be unsuccessful. Inflation and interest rates soon reached their highest levels since [[World War II]].
Carter increased government spending. However, when [[inflation]] skyrocketed in 1978 he changed his mind. He delayed tax cuts and vetoed the spending programs that he himself proposed to the [[Congress]]. Carter then tried to ease inflation by reducing [[money]] supply and raising [[interest rates]]. All of his efforts proved to be unsuccessful. Inflation and interest rates soon reached their highest levels since [[World War II]].
The rapid change in interest rates led to disintermediation of bank deposits, which sowed the seeds of the Savings and Loan crisis. Investments in fixed income were becoming less valuable. Holders of both bonds, and pensions being paid to retired people had their life savings wiped out. The stagnant growth of the economy (causing unemployment), in combination with a high rate of inflation, has often been called stagflation, an unprecedented situation in American economics. By 1979, public opinion polls had Carter's popularity lower than [[Richard Nixon]]'s during Watergate, partly because of his inexperience and difficulties working with [[Congress]].
Increases in the [[Consumer Price Index]] (CPI) reached double digits. Carter launched a time-honored tried-and-failed Wage-Price Guidelines program in which businesses could not increase prices or wages above a certain percentage or the company would be prohibited from doing business with the federal government. A company also could find itself on the prohibited list if it earned profits higher than the percentage recommended by the government. The Carter administration employed the [[marxist]] argument that higher profits are responsible for higher prices so that if a company made lower profits, its prices would be lower, too.
The rapid change in interest rates led to disintermediation of bank deposits, which sowed the seeds of the Savings and Loan crisis. Investments in fixed income were becoming less valuable. Holders of both bonds, and pensions being paid to retired people had their life savings wiped out. The stagnant growth of the economy (causing unemployment), in combination with a high rate of inflation, has often been called stagflation, an unprecedented situation in American economics. By 1979, public opinion polls had Carter's popularity lower than [[Richard Nixon]]'s during Watergate, partly because of his inexperience and difficulties working with [[Congress]]. Carter instructed the Federal Reserve printing presses to go pedal-to-metal in a failed effort to stage a short-lived election year [[recovery]], delaying a double-dip [[rececession]] until after Inauguration Day, 1981.
=== Energy Crisis ===
=== Energy Crisis ===