In the early 1970s, the US (United States) Federal Reserve was effectively not independent and faced major political pressure to support the maximum employment objective. [4] As a result, inflation expectations rose hand in hand with inflation over the course of the 1970s. In addition, the oil crisis in 1973 occurred shortly after the collapse of the Bretton Woods system of fixed exchange rates.
Developments in Europe Since late last year, market concerns have mounted over the ability of Greece and a number of other euro-area countries to manage their sizable budget deficits and high levels of public debt.