With consumer and wholesale prices surging, the Federal Reserve was under severe pressure to do something about the economic situation. Its top officials went to the White House, to the Treasury Department, testified in front of Congress. The message sent to politicians in each venue was the same; monetary policymakers’ hands were increasingly tied.
By August 1948, the US CPI had been in a sustained rapid increase for several years already. It began back in the summer of 1946 when the post-war boom heated up. European demand for goods and materials far outstripped the Continent’s ability to supply them given its unreconstructed war devastation.
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