Have you ever been brought back into close, personal contact with someone or something you thought you were done with? Sometimes it doesn’t matter whether you are over that one or that thing or not – sometimes you have to face the unpleasant fact that he/she/it is back in your life. Well I have been having to do just that. What brought about this unhappy occasion? Inflation.
Being the thoughtful homeowner that I am, I decided that the neighbors might appreciate it if I spent a little effort improving my lawn. So I bought a product that is supposed to kill crabgrass before it gets started, while simultaneously fertilizing everything else. Is there such a thing as birth control for crabgrass? I guess so.
As I walked to and fro across my soon-to-be green acreage all was fine until I noticed the dwindling level of the little pellets the color of cheap, boxed macaroni and cheese (and surely even less tasty) in my spreader. Then I went back and read the fine print on the bag. And there it was.
For many years I could buy bags of lawn stuff in two sizes – the small bag was good for treating 5000 sqare feet and the big bag was good for 15, 000 – which was a happy coincidence because the 15 ,000 square foot bag was almost exactly the size necessary for my lawn. But here was the unhappy news – the big bag I purchased at Costco contained enough lawn sustenance to treat up to – – -14,000 feet. Yes, my $50 bag of fertilizer messed me out of 1,000 square feet of green and crabgrass-free lawn. Well not actually, because I had to go to the neighborhood hardware store to buy a small bag to finish the job.
For those much younger than me this is a new phenomenon. But for someone who grew up in the 1960s and 70s it is a distasteful case of deja vu. Inflation is back.
I could cite example after example of what it was like in the old days. For a long time telephone calls in a pay phone (who is old enough to remember those?) were a dime. Then they went to fifteen cents. By the time I was in college they were a quarter. The same call kept costing more.
But the really pernicious examples were where those selling things could quietly make the portion you were buying a little smaller so that maybe you wouldn’t notice the price going up so much. Candy bars shrunk notoriously in the 1970s. As did other consumer products like boxes of laundry detergent or breakfast cereal. Many of us have never experienced this because after inflation finally got whipped (and not by Gerald Ford with his WIN buttons in 1974) we enjoyed the benefits of stable money for a long time. And those products that had shrunk started growing again.
About three years ago I got into some depth about what inflation is (and what it isn’t). It may be time to go back for a refresher. The Executive Summary is that inflation is always and everywhere caused by money losing its value. Everything else (like rising prices or shrinking portions) is a symptom. Ignore anyone who says different because they just don’t understand because they were surely within the 98% of every economics class that grumbled about how impossible it was to decipher those stupid graphs.
The difference between now and three years ago is that today we get to see in real time all the stuff I wrote about then. We are experiencing an odd mixture of real price increases and inflation increases. A “real” increase is like, say, gasoline on the east coast after a recent computer hack took a major pipeline offline. There is less gasoline than people want. Remember, jumps in price caused by things like supply issues are not inflation – they are a market response to a local shortage. And there are lots of other things where this is happening – remember, we are coming out of a pandemic that severely affected production capacity in many areas. Surpluses force prices down and shortages force them up – it’s the way things are supposed to work.
But more than that is happening now. Everything in general seems to be going up now, which is a sure sign that the value of our money is going down. If this is true, I have bad news for everyone. Inflation is kind of like a Friday night college drinking party. For the first couple of hours, everyone is having a great time. Everyone gets more attractive and more intelligent and has more fun. Only later do things start to get ugly when there is a price to pay for all of that overindulgence.
Inflation is the same way. It’s all fun and games when we all think we are getting big raises and where our house value and 401Ks keep going up. But give it time – soon those regular price increases for everything will become like a junkie’s fix, where we all expect it and cannot imagine life without it. And like a junkie’s fix, the increases that benefit you will never be enough. If you are one of those people who worked hard and saved your money – sorry, but you are going to come off poorly with sustained inflation. It’s the ones who ran up their credit cards and maxed out their home equity lines to take trips to the Europe and frequent the expensive restaurants the more prudent among us couldn’t afford and who owe tons of money to everyone who will make out – because they borrowed expensive dollars and get to pay back those debts with cheap ones.
There are always a few concrete causes, but it comes down (as it must) to government being government. Because it is government, and only government, that is ultimately in control over the number of U.S. Dollars in circulation. This is especially true when it is a government largely populated by people who only started paying attention to financial stuff after maybe 1985, and did not have the firsthand experience of living through the unpleasantness necessary to tame inflation the last time it got bad. Or maybe they are old enough to know better but who didn’t understand this stuff when it happened last time. Whatever the case, we are going to have to rely on them to fix it. Is anyone else feeling a little uneasy about this?
I wonder how many square feet the big bag of fertilizer will cover next year?