Service of Inflation

November 19th, 2009

Categories: Food, Inflation

I hear and read that we are not experiencing inflation. You could fool me.

I stopped by the grocery store for a 99 cent quart of milk a week ago on the way home from the office. My hands were full, as usual, so I came prepared with a $1 in my fist. The cashier asked for $1.09, explaining, while I put down all my stuff to search for a dime, that the price had changed the week before. I don’t remember recent gas prices making a 10 percent jump all at once–or did they?

Our apartment is cozy. The electric bill in fall has been in the $30 range and we just got a bill for $60+. It included $17 for gas-for our stove.  We are in the apartment three to four nights a week and rarely use the oven, only the stovetop and only for dinner.

And what about the price tags on meds that are grabbing front page headlines? The excuse for meteoric increases is that pharmaceutical companies are preparing for expected regulations that will force them to lower their prices under health care reform.  Should the reform hit a snag, do you think the cost of drugs will return to where they were? Meanwhile, health insurance rates also continue to gallop.

Does it count as inflation for the woman who wants to maintain a yearly mammogram schedule and must pay the full bill every other year because her insurance doesn’t want to cover a yearly test anymore?

Are there some industries where prices are staying the same or even decreasing?

More important: If there is inflation, what service does the government–and the economists it employs–render by reassuring us that there is little or none?

5 Responses to “Service of Inflation”

  1. AnnL Said:

    The economic condition of the world is too huge an issue to venture a response to your guestion about the government and the economists it employs, however it certainly raises many more guestions.
    I wonder what it was like when salt and sugar were rationed? Is that next? Sad thought.

  2. jmbyington Said:

    You are right…it is a huge subject.

    I brought it up in part because I see a disconnect between “we don’t have inflation” and yet basics seem to increase in price. I was hoping to be contradicted and for a different point of view.

  3. AnnL Said:

    I hope you are contradicted and we can all sleep better at night….it is a tender subject at best….

  4. Jeremiah Said:

    I’d like to answer your question in two parts:

    First: Inflation is perceived to be unpopular. All American governments, Republican or Democrat, as they do with unemployment numbers, distort inflation statistics for political purposes. This is no secret.

    Second: Inflation always benefits debtors, not creditors. When the U.S. was, on balance, a creditor nation, public policy was to act to restrain inflation. Now, that it has become, by a massive margin, by far the largest debtor nation in the history of the earth, and that its debt is growing exponentially and will continue to do so for the foreseeable future, it is very much to the benefit of the government in power, although it would deny it absolutely, to foster an economic policy which will eventually result in hyper-inflation thus wiping all that debt.

    This solution to what to do about public debt can also work to eliminate the problem of too many people owing too much money on their credit cards and against their homes. The rich and poor will only be marginally affected as the former are generally smart enough to hold gold and fixed, appreciating assets, and the latter have limited incomes and investments, and are usually heavily in debt.

    However, the middle class, and especially the elderly with fixed incomes, will have their savings and pensions wiped out, but does anyone care?

    Any reader who considers him or herself a member of the middle class, should read about what happened in Germany after the First World War, and how, in part as a consequence of hyperinflation, that country ended up with a government that eventually caused it even worse misery.

    Jeremiah

  5. Jeanne Byington Said:

    Jeremiah,

    As the middle class used to make up the majority of this country, I imagine that many care very much about this turn of events.

    Regarding Germany after the First World War, if you are referring to Hitler, I would say that far more than Germany suffered.

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