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It was mainly as a result of the prevailing monetary take a look at during the go out you to definitely rising prices and real economic growth had been connected (the new Phillips contour), thereby inflation try regarded as seemingly safe. The fresh Federal Put aside very first succeeded in the maintaining the value of the brand new You.S. money and you can price balances, treating the newest rising prices as a result of the first Globe Battle and you can stabilization the worth of the brand new money inside 1920s, before presiding more a great 29% deflation inside You.S. costs from the 1930s. The brand new Government Set-aside, that has been established in 1913, was designed to present an “elastic” money at the mercy of “generous change from number more than short periods of time”, and therefore differed notably of past forms of higher-driven currency for example gold, federal banknotes, and you may gold gold coins.

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