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This is largely due to the prevailing economic take a look at at the time one to inflation and you may actual economic gains have been connected (the fresh Phillips bend), thereby inflation is considered to be relatively safe. The brand new Federal Set-aside very first been successful inside the maintaining the value of the brand new U.S. money and you will rate balance, reversing the newest inflation due to the original Industry War and you can stabilizing the worth of the fresh dollar in the 1920s, ahead of presiding more an excellent 29% deflation inside U.S. rates from the 1930s. The brand new Government Put aside, that was established in 1913, was created to present a keen “elastic” currency susceptible to “big transform away from number over short periods of time”, and this differed notably out of previous kinds of high-driven currency for example gold, national banknotes, and you can silver coins.

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