Posted On: Monday - June 27th 2022 7:52PM MST
In Topics:   History  Economics  US Feral Government  Inflation  Dead/Ex- Presidents
Does anyone here remember these buttons from the time of President Gerry Ford? OK, at least do you remember seeing them at the flea market for 50 cents? Well, now they'd be 5 bucks, what with inflation ... * The 2022 version of a lapel button, since people don't have lapels for them anymore, would appear as an image on TikTok or mass text message from a modern President like Zhou Bai Dien thusly:
No, buttons or text message were never gonna cut it half a century ago, and mass text messages won't now. I was too young back in the time of those "WIN" (Whip Inflation Now buttons to understand that the law of Supply & Demand applied to currency as well as anything else, but I do remember an explanation of inflation during the 1970s that I naively agreed with:
"See prices go up, and employers then have to raise wages accordingly. Since they're paying higher wages, costs are higher, so they must raise prices. It's a vicious cycle."Yeah, that sounded right to me at the time, but I guess the news reporters of the time weren't too much brighter or more honest than those today. I don't recall (but then I didn't read/hear so much economic news at that age) mention of the US having just taken the dollar off the gold standard a couple of years before (these buttons). I don't remember mention of this FED creature (from Jekyll Island - nice vacation spot, BTW) at that time either. Where in hell was Ron Paul?**
"We just need to get off this cycle, and it'll all be fine. If we can hold down prices, then the whole thing STOPS."
Nope, it wasn't that vicious wage/price spiral. It was simply the Supply & Demand Law as applied to currency that was being created more easily, now that the government wasn't required to back up people's or country's dollars with gold.
Note: This song is not the same as the one by The 10,000 Maniacs. I hope it doesn't hurt anyone's feelings here, but Natalie Merchant is a better vocalist than Edith Bunker. Hey, somebody had to say it.
Just under 50 years later, older Americans may be feeling that Deja vu thing. It took long enough - as Peak Stupidity, with our Inflation topic key has long noted, real inflation since the mid-1990s has averaged 4-5%, not the 1-2% that our BLS green-eyeshade boys have been publishing for years. Now, we hear much more talk about "Hey, I just paid $7,99 for a pound of whatever. Can you believe that?!", and "I don't know why it's more, Sir. It's everything. Shit's goin' up."
It started with taking the currency off the gold standard back then. Then, Jimmy Carter-appointed FED Chairman Paul Volcker had the interest rates raised up right up against 20% (by December of 1980). This caused high interest rates on borrowing, especially mortgages, and a recession that [waves hands] reduced the inflation rate.
I think it will take some more reading and perusing the web by yours truly to relate the rate of money printing to inflation over the years since than. Federal money borrowing via Treasury Bills and Bonds continued through through the years, and there was never again a REAL surplus***. What we can say is that the Federal borrowing went from $1 Trillion/yearly (more than 1/4 of government tax receipts) to $4-5 Trillion for the PanicFest. That was all borrowed money, as in created out of thin air. Who knows what the real inflation rate is now? If you go shopping much, you may be forgiven for not believing the US Government's 8 1/2% number, bad enough as that would be.
Our post title here is a trick. We CAN'T use a man like Chairman Paul Volcker again. As Peter Schiff knows and has explained, Ron Paul has also, and Peak Stupidity has many times on these web pages, the FED is between a rock and a hard place on interest rates. Keep the rates the same, and inflation goes up, up, up, up! (I've been shattered!) Raise them seriously (not 50 basis points*****, no, much more than 500 basis points), and the stock market crashes and the Federal Budget is seen to be the sham that it is (with more than half of tax receipts going to interest).
America is not the manufacturing powerhouse of the Free World as it was 45-odd years ago, and it's a highly indebted nation now. We have no recourse but serious financial pain. Hey, Archie and Edith, no, where YOU were then... those were the days!
History doesn't repeat, but it (kinda) rhymes. Instead of "Whip Inflation Now", how about "Whip Joe Biden Now" buttons?
* Yeah, I know, there's nostalgic value too, of course. This is what sucks about that whole Jordan Peterson "cleaning up your room" bit. Lots of people might still have valuable Batman™ steel lunch boxes or WIN buttons if not for all that. Hey, I was close! A guy on ebay wants $6.49 for a Whip Inflation Now button, but if you buy 4 you can get 'em for $5.19 each.
** He wasn't long in coming, but during Nixon's time he was still in Texas delivering babies. He got elected to the US Congress in 1976.
*** That Clinton-era surplus was a gimmick done by merging the formerly separate Social Security receipts/outlays, still well in the black then, with the rest of the budget.
**** I like his title for that column too: End the Fed and Get More Doritos.
***** The economists' term for 0.01%, made up to have us thinking they are smart guys or something ...