An Interview with Stephen S. Roach: Project Syndicate

I view stagflation as a protracted period of high inflation, below-potential economic growth, and rising unemployment. In the stagflation of the late 1970s, the Fed was, indeed, a key actor. Convinced that idiosyncratic supply-side disruptions like energy and food shocks should not be addressed by monetary policy, Burns erred on the side of excessive accommodation, allowing the real federal funds rate to fall deeply into negative territory from late 1974 to early 1978, setting the stage for the Great Inflation that was to come.