Sunday, June 10, 2012

Interest About Inflation Seems to be Creeping Back

As usual, Paul Krugman has been going on about how we need more inflation. There is no surprise there, as this has always been his position (though one has to wonder how he feels about the woes of Argentina and Venezuela). Christina Romer has always come forward recently to discuss the need to further inflate the currency. Meanwhile, those of us separated from the Ivory Towers are left to deal with the real effects of currency inflation.

Barley. Think about how helpful lower food prices would have been with incomes crashing and people losing jobs. No, rising food prices are exactly what the farm lobby wanted.

Beef. These prices never fell. Looks like we're losing a lot of nutrition, and this is a population that is already starved for quality food.

Iron. Construction was hit particularly hard by the depression, due to malinvestment accumulating in higher goods industries. Think about what wonders lower prices of raw materials would have done to the failing industry.

Meanwhile, inflation rates in Argentina and Venezuela are near 25%. Is your income doubling every 2.8 years to keep up with that kind of inflation, not to mention your investments? Good luck with that.

1 comment:

  1. One of these days all that QE funny money sitting in excess reseve accounts at the Fed is going to enter the economy. Then we will learn what infltion is all about.