The Wealth of Nations 1977: From boom to depression to prosperity to stagflation toùwhat?

From boom to depression to prosperity to stagflation to—what?

Jobs, pay, prices, taxes—the heart of economic news—have been subjects of intense concern to ordinary citizens throughout history. Yet few trends in news coverage during the past 60 years have been more striking than the growth of business and economic reporting, in sheer volume, in sophistication and in influence on public opinion.

This shift mirrors a vast change in American and international perceptions. In the palmy days of the 1920s, the economy seemed to be a machine that ran automatically. It might develop rattles and knocks during wars and speculative panics, but most experts believed it should be left to follow its own self-correcting laws—i.e., be ignored. That comfortable belief has been destroyed by three generations of dizzying swings from boom to shattering global depression to unexampled post-World War II prosperity to the "stagflation" of the 1970s. The monthly trends in the consumer price index and the unemployment rate may bring joy, gloom or, frequently, bewilderment, but they are anxiously surveyed nowadays by millions.

Growing concern, however, has not made the economy much easier to interpret. Indeed, one of the characteristics of economic news is that its great turning points are shrouded in ambiguity and retrospective debate. With the rarest exceptions, the beginnings and ends of inflations, depressions and booms do not announce themselves with any event so unmistakable as the exchange of gunfire that opens a war. Thus, more than in most areas of the news, the stories reprinted here must stand as surrogates for many, many others.

The insane German inflation of 1923 was in part a singular event, a product of such particular circumstances as military defeat,

heavy reparations and the loss of major economic assets. But it wrought such psychological pandemonium and so thoroughly destroyed social as well as financial confidence that it still stands as the classic inflation of modern times. As such it remains a nightmarish symbol of a problem that has become perhaps the most persistent one haunting modern economies. Though the chronic inflations that bedevil the industrial West have never spiraled so totally out of control, the German mega-inflation nonetheless serves as a constant warning.

Stringent currency reform helped to subdue the German inflation, however, and the next five years developed into a kind of rosy blur in economic history. Not so 1929: it is one of those years, like 1776 or 1914, that is synonymous with a single event, in this case the Great Crash. Politicians and businessmen might keep saying that prosperity was just around the corner, but they could not still the anguished question that

TIME asked about one of the worst days in that debacle: "What then of 1930, or 1931, of even more distant times?"