The Debate

October 1981
National Review;10/2/1981, Vol. 33 Issue 19, p1122
The article focuses on the economic conditions in the U.S. as of October 1981. As the inflation and unemployment rates begin to drop, so do the stock and bond markets. The public blamed the market decline on government tax and budget cuts, which have not even gone into effect yet. One question that was raised was why did the interest rates not fall along with the inflation. Explanations to this question include the inflation risk premium, the tax wedge and the credit-market distortion. Throughout the deficit issue, the liberals were taking a conservative stand, some of them admitting that the cuts were needed.


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