Nevertheless, the current situation bears more than a passing resemblance to the price and interest-rate instability that defined the 1970s. Then, as now, it was thought that inflation could be tamed by half-measures that would not disrupt the economy, even though rising prices were provoked in the first place by extreme fiscal and monetary policies of the kind that have always had inflationary effects.

Some important differences exist between the 1970s and the 2020s, yet many of these are cause for pessimism. The federal debt is much larger today than it was in 1979, so government will have more difficulty in the future servicing its debt while maintaining other expensive programs. The U.S. economy is growing at a slower rate than in the 1970s. Demographic changes mean that close to half the population depends on government support in one way or another, including government employment, welfare, and old-age assistance, compared with roughly 20 percent in the 1970s—leaving the federal government little room to cut budgets. And the political situation today is far more polarized. For all these reasons, rising inflation and interest rates, leading to a recession and falling stock and bond markets, stand to cause even greater conflict and distemper today than they did four decades ago.

By the end of this year, we’ll find out whether modest measures will reduce inflation—or whether we are in for an extended period of rising prices and interest rates, with accompanying economic instability. Whenever the current era ends, as it is bound to do sooner or later, Americans will undoubtedly look back upon it as a golden age of sorts, and wonder if, and how, it might be restored.