what is the book ..."The Economic Roller Coaster" about?
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3.2 The Economic Roller Coaster 1969-1975
On January 7th, 1969, the Federal Reserve Bank, fearing inflation, decided to slow the economy by raising interest rates: the prime interest rate would jump to a record 7%. Compounding the deadening effects of this dramatic rate hike, Congress in that same month increased the capital gains tax to 35% from 24% and repealed the Investment Tax Credit. [7]
By November 1969, these actions had their intended effect and economic activity peaked, ending a growth cycle dating back to February 1961. [8] A year later, November 1970, the economy bottomed and then grew for three years before peaking once more in November 1973. The next bottom was attained in March 1975. These quick successions of peaks and bottoms made for very different conditions than the ever-predictable growth of the 1960’s.
By mid-year 1969, investors could no longer ignore the fateful signs of a slowing economy and the stock markets turned bearish. For anyone who did not appreciate how over-priced technology stocks had become, they soon took notice as their luster proved more a reflection of investors' greed than companies' prospects. Indicative of how technology would be impacted, domestic shipments of computer hardware dropped from $5.5 billion in 1969 to between $4-4.5 billion in 1970. [9]
Venture capital also began drying up in 1969. In 1970 and 1971 about half the amount committed in 1969 was invested in venture capital funds. (See Exhibit 3.0 Net New Commitments to Venture Capital Firms 1969 to 1978.) And that was the good news, because in the following years venture capital all but dried up. The lack of both public and private capital caused management to scramble. Thousands of companies that once dreamed of going public quickly sought to merge or be acquired. The stock markets would rebound with double digital growth in 1971 and 1972 before dropping drastically in 1973 and 1974 (the S&P 500 Index dropped 14.7% in 1973 and 26.5% in 1974).
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Written by one of the foremost experts on the business cycle, this is a compelling and engaging explanation of how and why the economic downturn of 2007 became the Great Recession of 2008 and 2009. Author Howard Sherman explores the root causes of the cycle of boom and bust of the economy, focusing on the 2008 financial crisis and the Great Recession of 2008-2009. He makes a powerful argument that recessions and the resulting painful involuntary unemployment are inherent in capitalism itself. Sherman clearly illustrates the mechanisms of Social equity is often referred to as the 'third pillar' in public administration, after efficiency and economy. It concerns itself with the fairness of the organization, its management, and its delivery of public services. This book describes social equity in terms of its arguments and claims in political, economic, and social circumstances.