The main reason behind the post-war cash crunch in America was
actually the combination of unemployment and inflation. Both the factors
together led America to the period of cash crunch. It was almost a serial
effect where one incident happened and the other just followed. People lost
their jobs and unemployment increased. This resulted in lower buying power of
the middle class. With inflation price of every commodity rose and this
resulted in further cash crunch. This was together called “stagflation”.
