The 1980s Go Bust, Then Boom

While Ronald Reagan’s ascent to the presidency is recalled by many as a breath of fresh air, his first two years in office were difficult economically. Federal Reserve Chairman Paul Volker was determined to wring the staggering levels of inflation out of the economy, and he did. Appointed by Carter in 1979 (and reappointed by Reagan in 1983), Volker raised the Fed Funds rate to an unprecedented 19 percent in 1980 and 1981. This choked off inflation but also brought on the severe 1982-1983 recession.
Meanwhile, the Republican Congress and administration passed the Economic Recovery Tax Act of 1981, the first of the Reagan tax cuts (another would follow in the Tax Reform Act of 1986), which reduced personal tax rates ...

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