Dollars Versus Real Dollars
In the last few days, the stock markets have broken all records. Obviously, we must be doing something right.
But a little probing into the situation suggests that the real condition is not quite what it seems to be. Informed economists know that there is a great difference between current dollars and real dollars.
At one time it was possible to ride public transit trains from one end of New York City to the most distant end for a nickel. That sounds incredible in the light of current fares that run into dollars.
At one time you could get a good meal in a Chinese restaurant for 50 cents. As a kid I was able to go to the neighborhood movie for a dime.
None of this is possible today. The evil force is a power called “inflation.”
When we think of inflation today we generally are talking about gas at the pump. In truth, inflation is almost a universal factor in our economy,
In part, our government is responsible when it runs the printing press to print paper money to pay its bills.
In part, inflation is due to the growth of monopolies, oligopolies and agreements among corporations that apportion given areas for given corporations.
Ironically, the Federal Reserve Board also adds to the inflationary pressure by a policy aimed to check inflation. Its policy is to raise interest rates on the grounds that if it makes borrowing more difficult it will cool the overheated economy. In practice what happens is that small businesses may not be able to pay that rate and they go bankrupt. Big business, with deep pockets, picks up the business and there is a further trend toward monopoly and oligopoly, which is, in turn, inflationary.
This is a moment of great uncertainty. Here’s what you can do about it.
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