May 18, 2001 (Ira Pilgrim)
I lost my job, I'm out of money and I'm on food stamps. But Bush says I can help boost THE ECONOMY by buying a new car and a new house.
Summers cartoon caption Nov. 1991
An old song lyric went, "Saturday, and I'm so broke; couldn't buy a girl a nickel Coke." When was the last time that you could buy a Coke for a nickel? Most of my readers can't remember when, because the last time that a person could buy a coke for a nickel was long before they were born. In fact, before they were born was the last time that you could buy anything for a nickel. Despite this, economic pundits say that there is little inflation. If you believe this, you probably also believe in the Tooth Fairy and Santa Claus. Whatever you believe about inflation, your pink bubble is about to burst.
What the economists mean is that compared to the inflation in Germany after World War I, when people lost substantial life savings almost overnight, and similar inflations in some South American countries, that the inflation that we have was not totally devastating. It was bearable for most people. It will still be bearable for those who are well off, and could be profitable for the rich, but for the rest of the American population, it promises to be almost as big a disaster as the great depression of the thirties. It was said at that time that Franklin Delano Roosevelt and his New Deal saved capitalism. What his administration did was to add a good deal of government regulation of economic entities such as banks and the stock market. At that time, a lot of people were beginning to want some form of socialism. Most people believed then that uncontrolled capitalism was a disaster. The events of he past year or two with regard to what has happened to the price of all sources of energy has reinforced that belief.
All that is necessary to produce such an economic disaster is a large increase in the price of something, or things, that everyone uses and has to use. The more than doubling of gasoline, diesel, propane and fuel oil prices affected almost everyone except those who don't have to use a motor vehicle or heat their house with electricity, oil or gas. In California, that includes almost everyone who isn't destitute. New York City residents might not be impacted as much by the price of gasoline, but fuel oil and gas prices could be disastrous.
The immense increases in the price of electricity, gas and propane is sure to have an immense effect on the price of everything. Businesses all use electricity and many use gas. They will pass their increased cost on to the consumer. This means that the price of almost all products will go up substantially.
The consequence of the increase in price will most affect those with fixed income, such as retirees and working people not represented by a strong union.
What will the administration do? In all probability the current Republican administration will do nothing, which was the same thing that the Republican Hoover administration did during the thirties. The consequences will probably be the same; things will get worse for the next four years. Then the Republicans will be replaced by the Democrats. Will they then get better? I have no idea.