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April 13, 2008
Inflation
So inflation's happening. I'm a business reporter, I watch the economic indicators, I've seen it coming for a while. I've seen it not just in the climb in the consumer and producer price indexes, but in the rise in the cost of a box of Cheerios, a slice of pizza and a gallon of gas. I buy a lot of Cheerios, pizza and gas.
I have read a lot of articles about the causes of our current inflation - it seems to be fueled by a wheat shortage, the alternative fuel boom's affect on corn prices, global economic growth's push on commodity prices, the decline of the U.S. dollar, the rise of the price of gas, and the Federal Reserve's anti-recession policies. It all makes a lot of sense.
I have also read a lot about how inflation is affecting people and countries and the world. The county jail is dispensing ketchup from a tub instead of individual packets and serving more turkey, less beef, to make budget. Airlines are going bankrupt. There's a deepening global food crisis. I get it, I get it.
I don't, however, get what I'm supposed to do about it. In fact, I think I remember reading in my economics textbook that inflation creates a conundrum for consumers. Is there any value in saving money, when its purchase power declines with each passing day? What should I spend on now, with the knowledge that it will cost more tomorrow? What is the best way to plan for my future when I don't know what the future holds? I've never been through this before.
The Washington Post just ran an article that really spoke to me. Economic theory is leaping out of the textbook and into real life for people in their teens, 20s and 30s, who are experiencing inflation for the first time, reporter Kristin Downey writes. She has it exactly right.
The thing that amuses me about how her article has been received: all these old know-it-all commenters are complaining about young folks for being bewildered by something they've never seen before, and also complaining about a story that describes this small, inconsequential side-effect of inflation, instead of writing about the broader causes and consequences. I disagree with the know-it-alls. I'm glad to finally read something that I haven't read before about inflation: that it is bewildering, that we don't know what to do, that I'm not all alone.
Posted by Courtney_Sherwood at April 13, 2008 11:19 PM
Comments
Thanks for the article! I've felt the same way, as a young person. I am trying to save money, but it feels like I have to save more and more to get the same benefit.
But, I still do also concern myself with the causes and solutions. I guess I may be an old know-it-all. There's plenty of room in the media for stories about all aspects of what's happening, so I'm certainly not going to complain about an article that takes a tack like this, but have you actually seen a good primer that tackles why it's happening and what we can do about it? If not, why not?
Posted by: Gregorus at April 14, 2008 06:08 AM
Hi Gregorus, thanks for the comment. You've got me wondering if I HAVE seen a big picture story, or if I've pieced my big picture view together because of all the reading I do. I'm going to poke around a little, and if I can find a good "causes of inflation" story or two I'll post some links.
Posted by: Courtney at April 14, 2008 07:02 AM
I've been thinking of this today in the context of global or international stock based funds. They're going up when all the other funds are going down, but does that mean people who invest in them are getting rich at the cost of people in Haiti starving? This article seems to imply so:
http://www.miamiherald.com/news/americas/haiti/story/494440.html
Is there any link to those funds going up and jobs being shipped overseas, people being exploited overseas or rising food costs causing the poor to starve? This seems to be something people of our generation should think about.
Posted by: Rachel at April 14, 2008 07:07 PM
Also, it the alternative fuel thing worries me because according to my engineering students the environmental cost of using corn to produce ethanol (via growing it, harvesting, shipping, etc.) produces as much C02 as is supposed to be saved by using it instead of gasoline. In other words, it supposedly doesn't actually have a positive effect, at least in terms of C02 production.
Posted by: Rachel at April 14, 2008 07:09 PM
Wow, those are some really good points you raise, Rachel. I don't know the answers to your questions, but I'm glad you raised them.
Posted by: Courtney at April 14, 2008 07:32 PM