Posted on 11/15/2008 7:03:07 PM PST by reaganaut1
Robert J. Samuelson, an economics columnist for Newsweek and The Washington Post, says historians have not understood the significance of the “Great Inflation” that raged through the economy in the late 1970s and early ’80s. It was, he argues in “The Great Inflation and Its Aftermath,” one of those watershed moments in American history, not at the level of the Civil War or the Great Depression, to be sure, but perhaps the major turning point of the postwar era.
In 1976 the Consumer Price Index rose by 4.9 percent; over the next few years it climbed steadily until it reached double digits, 13.3 percent in 1979 and 12.5 percent in 1980. And with these rising prices, productivity declined, standards of living fell, investors fled the stock market, debt crises followed one upon another. Almost everyone was affected, and not just in their wallets and bank accounts.
As he writes, “ ‘The economy’ is also a social, political and psychological process,” and the Great Inflation, he explains, did real damage to the American psyche, engendering a feeling of hopelessness, causing citizens to lose confidence in their political and economic institutions. An inflationary psychology took hold, creating a self-fulfilling prophecy as wages chased prices in an ever more destructive cycle. “In all of American history,” Mr. Samuelson writes, “this inflation had no comparable precedent.”
And who was to blame for this unparalleled disruption, this system-threatening state of affairs? According to Mr. Samuelson, we all were. Pogo Possum said, “We have met the enemy and he is us.” Mr. Samuelson says so too.
His tale of culpability begins at the end of World War II. With the Depression a recent memory, Americans entered peacetime worried above all about the return of widespread joblessness.
(Excerpt) Read more at nytimes.com ...
Making business less productive through regulation (cap-and-trade, bans on energy exploration, an increased minimum wage, racial quotas, "comparable worth", unionization without secret-ballot elections) is inflationary. Higher marginal tax rates that discourage production are also inflationary. Lots of Freepers have talked about "dropping out" of the taxable economy.
Inflation also raises effective tax rates on investments, since nominal (pre-inflation) gains are taxed.
very good.
Just wait till “the one” gets done with us...
Does this mean, interest rates on CD and savings accounts will increase in the same manner that they increased in the Carter Years?
I was still very young, but I remember how eventually inflation was a great thing for people with high amounts of debt. We had to get through some lean years, but then all of a sudden wages caught up, inflation slowed way down, and the house payment that used to be huge suddenly seemed pretty small.
Right now it seems like we’ve had increasing prices already for at least five years, but no wage increases. So, how long until wages catch up? Until a few years after someone with half a clue about how to stimulate an economy gets elected. So, 2012+3=2015. That’s a lot of lean years.
For anyone who has to buy food, fuel, a house or a car or truck, it's real.
Only it's not truly inflation, but an increase in price. (Inflation is an increase in the money supply without a corresponding increase in productivity, but try to get anyone in the news media -- even the "conservative" media -- to acknowledge it. They'd rather do as Samuelson does and blame everyone but the Fed.)
John Williams has some charts that more closely resemble the real world as far as inflation (and prices) is concerned. They're worth a look.
Well yes, over the last year it has been beyond obvious. But I’m talking about the last 6+ years. I’ve repeatedly said that here over the years and constantly told it was just house prices that I didn’t know what I was talking about...
What is significant is the BLS's fudging of the CPI components since ~2000. Whether this was by direction of the President, the Secy of Labor or a faceless bureaucrat will probably never be known.
The largest beneficiary, obviously, is the federal government. A lower CPI increase means lower adjustments to SS payments, retired military pay, on down the line.
It's quite an irony that the government on the one hand likes inflation because it makes the debt look smaller, but on the other does not want to admit it's happening.
BTTT
Government seems to love inflation - as long it is under the radar of the public.
It moves people up in the tax brackets increasing their revenue and the debt becomes smaller in real value. And it all happens quietly while no one really notices. People think they are earning more when in fact prices increase more than their earning increase.
What “fudging” are you refering to? And what makes it “fudging” instead of legitimate changes in methodology?
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