The results of high inflation
Published 10:40 am Thursday, February 1, 2024
When I was a little kid, about 70 years ago, my grandmother would complain about how much more expensive things were then when she was young.
She would say, “back when I was young, I could buy a loaf of bread for less than 10 cents and meat was dirt cheap.”
My father-in-law, who served in World Wars I and II, told me several times that inflation increased after World Wars I and II. He also indicated that once prices went up, they didn’t come down again.
In 1969, Carol and I bought our first house for $12,600. It’s not as nice as our present house which cost over $200,000 and would sell for much more today. Also, in around 1969, we could buy two cheeseburgers, two orders of French fries and a large drink for less than a dollar from McDonald’s. Try to do that now.
What I’m getting at is inflation has been with us a very long time. It seems to appear when there are excesses in the economy and possibly after major wars when spending seems to heat up. For a long period of time, the last 20 years, inflation has been low up until 2021.
When Covid occurred, massive amounts of money, trillions of dollars were spent during both the Trump and Biden administration to firm up the economy. All this spending overheated the economy, my opinion, and inflation went up like a rocket ship.
The national debt exceeded $34 trillion in January and is increasing at about a trillion dollars a year or more. The national debt held by the public is $26.9 trillion. This is roughly equal to the size of the U.S. gross domestic product.
The federal reserve is responsible for keeping inflation under control. One of the controls they use during high or out of control inflation is to raise interest rates. Interest rates have been raised 11 times since March 2022 leading to higher borrowing rates for individuals and businesses.
Inflation came down to a reported 3.1 percent in November 2023 but spiked up in December due to the actions by the federal reserve. Only one time in the last 20 years, in 2009, has the U.S. experienced a negative inflation rate.
Do I expect prices to go down? No, I do expect them to go up at a slower rate. Cost of housing may go down. Do I personally believe the inflation numbers reported by the government; no. You may call me a skeptic but that is how I feel.
Inflation has caused housing to be unaffordable to a portion of the population. The increases in the price of food are a burden for everyone.
I’m a positive person and would like to see the inflation rate below two percent and a steep decline in interest rates. The U.S. economy appears to be doing well but wages have not caught up with the increases in cost and people on a fixed income have been severely burdened by inflation. Hopefully things will improve in the future.