I’ve been reading some articles about the current economy lately, and one of my least favorite gurus is a guy named Paul Krugman. Now I’m certain that Mr. Krugman has a wall full of certificates and diplomas documenting his ability to advise the nation on what we need, but the guy’s ideas make absolutely no sense to me whatsoever.
I’m not even sure what Mr. Krugman is actually proposing that sane Americans should be doing at this point, but it seems that he and some others are unnaturally afraid of “deflation”. Like most of you over forty, I can remember the runaway inflation of the 80’s and I’m absolutely certain that it was a really bad thing. It was the only time in my adult life that I could imagine needing help feeding my children. Of course, that didn’t happen, but the fear was there just the same.
Creeping inflation, on the other hand, has reached the point that taking my grandchildren to a movie takes a huge bite out of a hundred dollar bill, and is even more insidious. I feel like an old codger complaining that in the “good old days” I could buy a really nice lightly used car for $20,000, but that same car now would cost nearly $40,000. The truth is that I can fairly confidently predict that our budget will probably never allow for a really nice car again. I’m not whining about it, it’s just a fact of life, if the economy continues to inflate while our income doesn’t.
Could we just try a little deflation for a year or two, Mr. Krugman, and see where things settle?
I’m not an economist, but I do believe in the laws of Supply and Demand. Supply me with quality goods at a reasonable price and I’ll probably buy them when I need them. I might even buy a few things I want now and then, but only if I can afford them. If this leads to deflation, so be it. It probably means that the goods and services were being hawked at inflated values to begin with. This not an un-American idea, it’s only common sense.
The problem as I see it is that there are huge inconsistencies in our economy. Value and usefulness have been divorced from cost and it’s like Wonderland out there in Shoppinghaven.
My grandsons were dying for some sort of souvenir bands recently, and on a recent outing I bought them some. They amount to rubber bands in various shapes and themes, and they cost upwards of $5 a pack. They probably cost pennies to produce, and they break and soon become useless. I bought them, they were only $5 and I don't indulge the grandchildren often, but before the day was over there were tears over the silly things.
On the other hand, I can buy a comfy pair of well made everyday pants at Walmart for $10 which will probably last me several seasons. I couldn’t possibly buy the fabric and make them myself at that price. I would probably happily pay $20 for the pants, possibly even more, because they have value…and pockets!...but won’t pay even $1 for the silly Silly bands again…and I don’t think the kids will either. I know that by my spending money on that product, someone will reap some income from it...but at what real cost to our economy? We can't just keep printing and wasting money on things we don't need forever.
I hope our economic ship sets itself aright again, but I know it won’t happen by just printing more money for people to buy silly bands with.