Stagflation
- The US had withdrawn from the Bretton Woods agreement in 1971, which had used the gold standard to set exchange rates for currencies in most of the world.
- Most countries did the same and currencies were allowed to float on world markets, which resulted in inflation.
- During this time, and Arab-Israeli war began and the American support caused OPEC to impose a 5 month embargo in the US and Netherlands, and reduced oil production, which forced the price of oil to quadruple. This made goods more expensive and rose.
Ebb & Flow of Liberal Economic
During this time the economy went into a recession, due the stagflation that was occurring, this prompted governments to make a neo-conservative move and switch to a supply side economic system.