Anyone who was around in the 1970s will recall how awful inflation was at the time, with high double-digit interest rates, constantly rising prices, and a stagnant economy, or what was then called “stagflation.” Unfortunately we may be on the cusp of a recurrence of these conditions as the Producer Price Index is now approaching a 10% rate of increase. We are now being told that it will probably taper down to 2% by the end of next year, but I don’t believe it for a second. Unless the principles of economics have somehow been miraculously transformed we may be headed towards really troubled waters, with very little maneuvering room left thanks to irresponsible government profligacy.
Even if it eventually passes some of the damage remains. Prior to that period interest rates on things like credit cards were nowhere near their current high double-digit rates, so even though inflation eventually dissipated the rates never went down. The Federal Reserve has incessantly been printing money, while keeping interest rates artificially low, thereby hurting savers and forcing more money into speculative markets, while the congress continues to spend money we don’t have. “Trillions” has now become part of the lexicon, replacing billions, about which Sen. Dirksen of Illinois once said “a billion here, a billion there, and sooner or later you’re talking about real money.”
When the pandemic first emerged the government response was to flood the economy with money it didn’t have, sending funds to everyone who didn’t need it, and encouraging people not to work instead of targeting those who were most directly hurt by restrictive government policies, i.e. the restaurant industry. A well-thought out carefully implemented, targeted plan would have cost a fraction of what we have spent, but there is no evidence of any capacity for considered, forward thinking policies in this country, so we have now been adding trillions to the deficit, yet this administration and congress now want to run up trillions more in spending that there is no pressing need for, which is just totally insane. If they get away with this the situation may soon transition from perilous to hopeless.
Someone is going to have to pay for this and that burden is now going to be born by younger people and future generations. Those who support the people responsible for this are simply cutting their own throats. Even if the government continues to print and spend money we don’t have, the only possible result is a lower standard of living and a debased currency that is worth less and less while goods and services cost more and more. Anyone should be able to understand this. If you borrow money today to indulge yourself, going forward when you have to pay it back, you will have that much less to get by on. But individually we can’t do what the government does, i.e. print money and raise taxes, so inflation is the only possible outcome.
Meanwhile the administration has immeasurably contributed to further inflation for a range of policies, the most egregious of which is a war on the petroleum industry. Stopping pipelines that are nearly done, discouraging domestic production, and ruining the energy independence we had achieved as the largest producer in the world. Then when people chafe under rising gas and heating prices and finding themselves that much poorer they try desperately to get middle-eastern countries to increase the kind of production they have sabotaged.
This is all based upon a fantasy, that somehow we are going to precipitously get off of fossil fuels with nothing but fuzzy alternatives in place. The reality is that oil production continues to be the lifeblood of the world economy. It powers everything- vehicles that transport all the goods we consume, shipping, not to mention heating our homes, powering our automobiles, and dozens of other basic necessities. Nothing contributes more to higher prices overall than rising fuel costs. But they remain oblivious, or worse indifferent to the damage they are causing in the service of a murky progressive “green” ideology while those who can least afford it are bearing the burden of these rising costs.
I truly hope that I am wrong, and that somehow inflation is miraculously going to disappear without having to make serious changes, but if I am right we are all screwed.