Price Controls, Black Markets, And Skimpflation: The WWII Battle Against Inflation

With inflation surging right now, U.S. leaders are naturally thinking about how to fight it. In modern times, that responsibility has mostly fallen to the Federal Reserve. The Fed can (and likely will) raise interest rates to cool down the economy, which should — theoretically — lower demand for goods and services and reduce upward pressure on prices. This will also likely bring pain to many Americans as the economy is forced to slow down.

Back during World War II, the United States took a radically different approach to fighting inflation. And the mess that ensued might explain why the Biden Administration, and most other policymakers, are reluctant to try it out again. Planet Money just released a great episode that delves into this history with some different details (and cool archival sounds!), and you should check it out.

The threat of inflation loomed even larger during WWII than it does today. As America became an "arsenal of democracy," we spent massively on machines and supplies for war. The skyrocketed, from