Friday, June 10, 2011
The new bugbear in economic circles is, apparently, inflation. Both Atrios and Digby think the war on workers is based on a false war on inflation, and they scratch their heads trying to figure out how come, and marvel at the machinery of falsehood Republicans must employ to pull the wool over our collective eyes once again.
Which just proves neither of them were alive or paying attention in the 1970's.
My memories of inflation are admittedly fuzzy, but it was the worst problem facing America after the Vietnam War. Milton Friedman rose to prominence denouncing it, and made his monetary policy virtually US economic policy (I can't say how much real influence he had in the halls of government, but he had a great deal among conservatives) by declaring it would bring a final end to inflation. Robert Lekachman established it as a permanent problem of capitalism. Paul Volcker finally brought it to heel under Reagan by raising interest rates until the economy slowed down enough for inflation to die (there is a reason there are no more usury laws in the states, or that such laws are effectively toothless. Inflation was the culprit. There was a time, for you who don't remember, when any interest rate above 10% was a violation of black letter law and impossible to charge. If the sky is the limit now, you can thank inflation and the only solution to it anyone could find. The Fed's interest rates went back down, but the statutes didn't revert.).
Inflation, for more than a decade, destroyed buying power and eroded incomes. Most of the reason women entered the work force was not empowerment, but inflation. It gradually but inevitably took two incomes to pay for what one had paid for all along. Inflation did that. When it ended, under Reagan, we got yuppies and "Beamers" and $2.00 coffee, and the current rage for possession above all things. Inflation laid the foundations of the economic world we live in today. And yes, it's true fighting inflation is fighting the last war, but to wonder why that is happening is to wonder why people still talk about Vietnam or MIA's or the struggle for civil rights. It may not be sound policy to worry about inflation, but to act like it is a chimera is to act like the lessons taken from World War II that lead to our standing army and a permanent military headquarters (the Pentagon was designed to be an archive, when after the war we returned to a non-standing army status) are equally mythical, simply because that war ended before many of us were born.
Posted by Rmj at 9:06 AM