“…THE CAR PAYMENT…THE HOUSE NOTE…”

2/22/10

I highly recommend reading Jon Hilsenrath’s article on page A2 of today’s (i.e., Monday, 2/22’s) Wall Street Journal entitled “Low Inflation Always Best? Some Urge a Policy Rethink.” In this article, Mr. Hilsenrath reports that some economic “thinkers” are proposing ramping up inflation (but just a tad, of course) for a number of reasons, mostly to give the Fed room to work its interest rate reducing magic when economic conditions call for monetary ease. But, as Mr. Hilsenrath reports

“There are other reasons some would welcome a little more inflation now. Governments in the U.S. and elsewhere, and many U.S. households, are sitting on mountains of debt. A little more inflation could in theory reduce the burden of servicing and paying that off…”

So, according to the financial solons who counsel more inflation, savers should have their savings inflated away in order to make it easier for politicians to blow other people’s money and spenders to live beyond their means. Senior citizens should have the nest eggs they have painstakingly accumulated over years of savings and self-denial debased in order to make it easier for younger generations to pursue lifestyles well beyond the dreams of their parents and grandparents and to do so with money they effectively borrow from their parents, grandparents, and, of course, the Chinese and other countries whose patience with our spending habits is about spent.

And people wonder why people don’t save in this country. In addition to the debasement of the national character that has been the hallmark of the last twenty or thirty years and that is reflected in extravagant, showy, and silly lifestyles, public policy is geared toward making it easier to borrow and spend and less rewarding, and more difficult, to save and invest. (See my other post of today, WHAT’S THE NOTE ON THAT?). Those of us who save are punished, those of us who spend are rewarded.

Our economy, and our society, is doomed.