Inflation is a tax. The more it costs to purchases goods and services, the more expensive it is to buy food, housing, transportation and live a quality life. We are about to enter an inflationary period that will harm the poor and middle class—while the rich could care less.
“When interest rates rise, people find it harder to borrow money. Higher interest rates slow down the purchases of homes and cars. Individuals with credit cards, knowledgeable of rising interest rates, cut their spending.
The Fed’s timidity has caused inflation to skyrocket. Inflation at two percent is somewhat tolerable. At a rate of seven percent, people have to restrain their purchases of food, medicine, gasoline, and other items. Businesses slow down or stop hiring.
Don’t be surprised if gasoline reaches $6 per gallon or more in the coming months.”
Go to the grocery store and you will see outrageous prices. The cost of gas or buying a home can make you faint. Inflation is a big tax—killing the economy.
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STOP INFLATION NOW: BRING BACK ALAN GREENSPAN OR HIS LIKENESS
By Richard Colman, Exclusive to the California Political News and Views, 2/3/22
Do you remember the 1990’s? During that era, America created over 20 million jobs, inflation was low, and the Dow Jones Industrial Average went from 3,000 to almost 12,000.
Who should get the credit?
Let’s give some credit to President Bill Clinton, a Democrat, and House Speaker Newt Gingrich, a Republican. They may have hated each other, but they got federal spending under control. Gingrich wanted a balanced budget. Clinton agreed as long as Social Security and Medicare were not touched. From 1996 to 2000, the federal budget was balanced.
But the most credit for a good economy belongs to Alan Greenspan, who, during the 1990’s, was chairman of the Federal Reserve, a powerful government body that sets interest rates.
Greenspan is a Republican. He worked on Wall Street for many years. He was an economic adviser to President Gerald Ford. In his younger days, Greenspan was a disciple of Ayn Rand, a refugee from the 1917 Bolshevik Revolution in Russia. Rand became an American and was famous for writing influential books, two of which are “The Fountainhead” and “Atlas Shrugged.”
Today, Greenspan is married to Andrea Mitchell, an NBC News correspondent. Mitchell has her own show on MSNBC, a liberal cable television operation run by NBC.
In 1990-92, there was a recession. To eliminate the recession, interest rates dropped. As an economic recovery began, Greenspan and his Federal Reserve colleagues began to raise interest rates.
Starting in February 1994 and ending in February 1995, the Fed (as the Federal Reserve is known) raised interest rates from three percent to six percent. The rise in interest rates prevented inflation from being a problem.
Once interest rates went up and the federal budget was balanced, America went through a period of great prosperity.
In 2020, the Federal Reserve, under Chairman Jeremy Fowler, cut interest rates to prevent the coronavirus pandemic from bringing about large unemployment. By mid-2021, the pandemic seemed to recede, but the Federal Reserve did not raise interest rates. By mid-2021, until the present time, inflation has come roaring back. By December 2021, prices were seven percent higher than a year earlier.
Since mid-2021 to the present time, the Fed has been too timid. There is talk about the Fed’s raising interest rates in March 2022. Increases in interest rates should have begun in mid-2021.
When interest rates rise, people find it harder to borrow money. Higher interest rates slow down the purchases of homes and cars. Individuals with credit cards, knowledgeable of rising interest rates, cut their spending.
The Fed’s timidity has caused inflation to skyrocket. Inflation at two percent is somewhat tolerable. At a rate of seven percent, people have to restrain their purchases of food, medicine, gasoline, and other items. Businesses slow down or stop hiring.
Don’t be surprised if gasoline reaches $6 per gallon or more in the coming months.
Inflation hurts everyone. But the consequences of inflation bear down especially hard on retired people living on fixed incomes and on low-income people.
There will be political consequences to higher inflation. In November 2022, look for both houses of Congress to be taken over by the Republicans. Some analysts are predicting that 30 to 60 seats in the House of Representatives will go to the Republicans. Currently, the Democrats have a razor-thin majority in the House. The Senate has 50 Republicans and 50 Democrats, allowing Vice President Kamala Harris, a Democrat, to cast a tie-breaking vote, giving the Democrats Senate control.
What America needs is Alan Greenspan – or someone like him –- to take command of the Federal Reserve.
Inflation must be stopped dead in its tracks.
