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The Dutch Mistake

When I began my research about the development of Stagflation in the Netherlands, it became obvious that this phenomenon had begun to develop somewhere between 1960 and 1970. It was easy to come to that conclusion because the word Inflation appeared for the first time in the Dutch "Winkler Prins Encyclopedia". The first part of this encyclopedia was published in 1970. Besides that the encyclopedia mentioned clearly that the word "Stagflation" had become in use around 1970.

The first discovery that I made was that the inflation, related to the developed Stagflation had not been imported from other countries. I found that proof during a visit at the Dutch "Centraal Bureau voor de Statistiek." in Rijswijk, in a publication developed by the Central Bureau of Statistics together with the "Erasmus University" in Rotterdam, called: "Twenty five years Inflation in the Netherlands between 1952 and 1977." The cost of this discovery was 12.50, about $4.50.

This publication showed among others a graphical presentation of the producers/wholesale inflation and the consumer inflation on the same page. It was clearly visible that the production/wholesale inflation had followed the consumer inflation with about two months delay. Consequently the inflation had begun in the Netherlands and had not been imported from outside sources.

This discovery made it quite clear that I had to look for some clearly identifiable local economic developments before 1970.

Looking at the statistics from 1960 to 1970 it became immediately obvious that something had happened between 1962 and 1965, because the country reached in 1964 its lowest unemployment rate ever with only 30,000 unemployed people, with a population of about fourteen million people.

However in 1965 unemployment began to rise. From that moment it continued to rise constantly. In 1981, at the moment that I did my research, the unemployment had risen to 240,000.

A trip to "Het Rijks Prenten Kabinet" in the Hague allowed me to read the news papers between 1960 and 1970. Reading the news columns made it reasonably easy to reconstruct the reason for the appearance of Stagflation in the Netherlands.

However, the reconstruction did not mean that I understood fully at that moment all the related consequences or reasons for every development.

There were two major developments in the beginning of the sixties and more specifically in 1963 and 1964 that had become instrumental in the development of a Stagnating economy while at the same time the prices began to rise.

The Work of Professor Jelle Zijlstra

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