1977 - Jimmy Carter Becomes President
                              and The Fed Fights Inflation

Stagflation is SupremeI
Rising Oil Prices and  Inflation

Unemployment by Month:

( http://www.tigersoft.com/Unemployment/index.html )

CPI   Dec-Dec Pct Change                                                             Avg. Annual Domestic Crude
-----------------------------                                                           Nominal   Inflation Adj.
                                                                                                      -----------------------------          
1946                                                                                               $1.63       $17.73 
1947                                                                                               $2.16       $20.84
1948                                                                                               $2.77       $24.86
1949                                                                                               $2.77       $25.10
1950                                                                                               $2.77       $24.84
1951                                                                                               $2.77       $23.02                                             
1952                                                                                               $2.77       $22.50
1953                                                                                               $2.92       $23.49
1954                                                                                               $2.99       $24.02
1955                                                                                               $2.93       $23.56
1956                                                                                               $2.94       $23.35
1957                                                                                               $3.14       $24.09
1958                                                                                               $3.00       $22.42
1959                                                                                               $3.00       $22.50
1960                                                                                               $2.91       $21.24
1961                                                                                               $2.85       $20.57
1962                                                                                               $2.85       $20.32
1963 1.6%                                                                                      $2.91       $20.51
1964 1.0%                                                                                      $3.00       $20.86
1965 1.9%                                                                                      $3.01       $20.59
1966 3.5%                                                                                      $3.10       $20.60
1967 3.0%                                                                                      $3.12       $20.18
1968 4.7%                                                                                      $3.18       $19.69
1969 6.2%                                                                                      $3.32       $19.53
1970 5.6%                                                                                      $3.39       $18.84
1971 3.3%                                                                                      $3.60       $19.18
1972 3.4%                                                                                      $3.60       $20.57
1973 8.7%                                                                                      $4.75       $22.89
1974 12.3%                                                                                    $9.35       $40.84
1975 6.9%                                                                                    $12.21       $48.91
1976 4.9%                                                                                    $13.10       $49.66
1977 6.7%                                                                                  $14.40       $51.22
1978 9.0%                                                                                   $14.95        $49.47
1979 13.3%                                                                                 $25.10        $73.89
1980  12.5%                                                                                $37.42        $98.07
1981                                                                                            $35.75        $84.93
1982                                                                                            $31.83        $71.20 
Inflation Data: ( ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt )   Oil Prices
( http://www.inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp )


The above chart shows oil prices adjusted for inflation in June 2009 dollars. 

When Carter came into office official US unmployment had been above 7.2% since December 1974.  The Fed
had steadily been lowering the Discount Rate from 8% in April 1974  to 5.25% in 1976 November 1976, but
the economy could not provide full employment.  (See http://www.tigersoft.com/Tiger-Blogs/8-18-2003/index.htm )
Meanwhile, oil prices and inflation rose.  So on 8/31/1977 the Fed raised the Discount Rate to 5.75% from 5.25%.  That
immediately drove the DJI down below 870. Despite the DJI's decline of 10% TO 800, the Fed raised the Discount
Rate to 6.0% on October 26th, 1977.  These rate hikes killed the positive breadth the NYSE was showing until
the end of July.  "Stagflation" prevailed: high unemployment and high inflation.