Price Freeze

(noun)

An economy-wide tool to control costs, most commonly instituted as a response to inflation and usually below market level, as part of an incomes policy.

Related Terms

Examples of Price Freeze in the following topics:

  • Nixon and the Economy

    • In 1970, Congress had granted the President the power to impose wage cuts and price freezes.
    • He subsequently announced temporary wage and price controls.
    • Nixon thus reimposed price controls in June of 1973, which quickly became unpopular with the public and businesspeople.
    • Many saw the price board bureaucracy, associated with Republican policy, as more dangerous than powerful labor unions, which were associated with the Democratic party.
    • The price controls produced food shortages, as meat disappeared from grocery stores and farmers drowned chickens rather than sell them at a loss.

  • The Nixon Shock

    • This drop was caused by gold purchases by foreign governments and foreign arbitrage of the U.S. dollar (that is, foreign investors who purchased U.S. dollars in order to take advantage of the price difference between foreign and domestic markets).
    • On August 5, 1971, Congress released a report recommending devaluation of the dollar in an effort to protect the dollar against "foreign price-gougers. " Meanwhile, European countries began leaving the Bretton Woods international financial system, which had based the value of foreign currencies on the value of the gold-backed dollar.
    • In order to stabilize the economy and combat the 1970 inflation rate of 5.84%, President Nixon imposed a 90-day wage and price freeze, and a 10 percent import surcharge.
    • On August 15, 1971, the announcement of the price-control plans proved to be very popular, and raised the public's spirit.
    • Nix was credited with finally rescuing the American public from price-gougers, not to mention a foreign-caused exchange crisis.

  • George H.W. Bush Abroad

    • The struggle to remove him from power began in the Reagan administration, when economic sanctions were imposed on the country; this included prohibiting American companies and government from making payments to Panama and freezing $56 million in Panamanian funds in American banks.
    • At the same time, other Arab states had increased their oil production, forcing oil prices down and further hurting Iraq’s economy.

  • Technological Advancement

    • Ammonia from plants built during World War II to make explosives became available for making fertilizers, leading to a permanent decline in real fertilizer prices.
    • With more applications than available television channels, the FCC ordered a freeze on processing station applications in 1948 that remained in effect until April 1952.
    • The use of TV was fueled by the drop in television prices caused by mass production, increased leisure time, and additional disposable income.
    • The use of TV was fueled by the drop in television prices caused by mass production, increased leisure time, and additional disposable income.

  • The American Military Forces

    • Standard conditions for the Continental Army included low pay, hard work, freezing winters, hot summers, poor clothing and shelter, little food, harsh discipline, and a strong likelihood of becoming a casualty.

  • The Election of 1984

    • Mondale ran a liberal campaign, supporting a nuclear freeze and the Equal Rights Amendment (ERA).

  • The Election of 1840

    • After giving the longest inauguration speech in U.S. history (about 1 hour and 45 minutes in freezing cold weather), Harrison served only one month as president before dying of pneumonia on April 4, 1841.

  • Budget Cuts

    • These views were exacerbated by the fact that Reagan's economic regimen included freezing the minimum wage at $3.35 an hour, slashing federal assistance to local governments by 60%, cutting the budget for public housing and Section 8 rent subsidies in half, and eliminating the antipoverty Community Development Block Grant program.

  • Energy and Environmental Reform

    • In April of the same year, President Carter began a phased deregulation of oil prices.
    • At the time, the average price of crude oil was $15.85 per barrel (42 US gallons (160 L)).
    • After 1980, oil prices began a 20-year decline down to a 60 percent price drop in the 1990s.
    • Carter agreed to remove price controls in phases; they were finally dismantled in 1981 under Reagan.
    • While the regulated price of domestic oil was kept to $6 a barrel, the world market price was $30.

  • The Energy Crisis

    • Independently, the OPEC members agreed to use their leverage over the world price-setting mechanism for oil to stabilize their real incomes by raising world oil prices.
    • The price of oil quadrupled by 1974 to nearly US$12 per barrel (75 US$/m3).
    • Some of the income was dispensed in the form of aid to other underdeveloped nations whose economies had been caught between higher prices of oil and lower prices for their own export commodities and raw materials amid shrinking Western demand for their goods.
    • On an international level, the price increases of petroleum disrupted market systems in changing competitive positions.
    • This chart reveals the steep increase in oil prices related to the Energy Crisis of 1973.