Posted by Mitch Townsend on November 16th, 2005 (All posts by Mitch Townsend)
With wages frozen by government edict, employers begin offering non-taxable health insurance to attract and retain scarce employees. The next sixty-odd years will feature numerous proposed government solutions to this unintended secondary effect of the original government solution.
President Eisenhower successfully resists Democratic pressure to reduce the income tax rates originally put in place to finance WWII and the Korean War. The top tax rate on individuals was 90%. The modern tax shelter industry is born.
The Interest Equalization Tax of 1963 and the Foreign Credit and Exchange Act of 1965 result in the birth and rapid growth of the Eurodollar trading system in London. With the currency market permanently placed outside of government control, the US was soon forced to abandon the gold standard (1971) and the Bretton Woods system.
Following the collapse of the Bretton Woods arrangement, the Nixon administration tries to control inflation by imposing wage and price controls, while Arthur Burns at the Federal Reserve simultaneously cuts interest rates. The Federal funds rate went from 3.2% to over 10% within two years, and stagflation was invented.
Automobile companies improve the anti-theft features of their products. As cars become more difficult to hot-wire, thieves increasingly turn to carjacking. The US Department of Justice begins keeping survey statistics for this crime in 1987.
CAFE fuel economy requirements cause carmakers to build smaller, lighter vehicles. Consumers react to the space shortage and crash dangers by buying SUV’s.
It ain’t over ’til it’s over.