In 1970 I was thinking college was getting me nowhere. It was fun for a naturally curious guy but whenever I did art I looked around and saw nature or some simple coincidence easily outdo my efforts. A leaf or a crack in the sidewalk were way more intriguing than my paintings. I called Dad on my landlord’s phone and we were on the same page. He was a stockbroker and the recession in 1970 hit him hard. There was a lot we didn’t agree on in those days but on this, we did. My inner rebel said it was time to be on my own and prove myself.
I recently read a column by Ron Johnson (R, Wisconsin) warning of stagflation. I remembered that being an issue in the ’70s. I had to look it up.
I say sarcastically, a recession called for immediate action by President Nixon:
- He instituted wage and price controls.
- He imposed a 10% tariff on imports.
- He removed the United States from the gold standard.
These policies got Nixon reelected and drove unemployment to 9%.
In my research I found an article by Kimberly Amadeo who has a beautiful smile and a master’s in business from MIT. She explains that inflation can occur when the central bank (Federal Reserve) prints money or through “monetary policy” (basically printing money). Stagflation occurs when government policies slow production at the same time. Stagflation brings high unemployment.
She was good enough to answer my email where I essentially said production is being slowed, so isn’t that an ingredient in stagflation? She says, “Stagflation can only occur if government policies disrupt normal market functioning.” I contend that government policies are disrupting “normal market functioning” to a level few of us remember.
- covid lockdowns
- vaccine mandates
- government financing of unreliable and uneconomical alternative energy
- on the horizon, the greatest infusion of corporate welfare in history with the infrastructure bill
Workers have a dream-come-true situation right now. But the $15 minimum wage is quickly becoming an anachronism as workers are recruited with higher and higher pay. Does anyone actually believe that a few cuts in CEO compensation will pay for that without raising the prices those workers pay to simply live?
Jeff Bezos flew from Bill Gates’ mega yacht off the coast of Turkey to the Climate Summit in Scotland. Joe Biden flew there in four jets and a helicopter. Too many jets flew there for their airplane parking lot. These are the people who want us to believe the rich are being taxed to fund their grand schemes. They will sacrifice nothing.
Who could have ever believed McDonald’s would pay $20 per hour? Yet real wages (purchasing power) have fallen each of the last eight months. Last year brought us 1.73 million new millionaire households. So what? The Zimbabwean mindset of our rulers will not be pretty to us. But Biden and Bezos will not have to resort to hitchhiking. Inflation is a tax on the poor imposed by those who claim to be their friends.