Crash test dummies

By Tom Toles

***

Thought bubble

I am not an economist, which means that I can't explain exactly how or why the economy does what it is doing, and I can't tell you what it will do next. Which also means that NOBODY is an economist. The economy is another thing like the weather, in that there are a lot of variables in play, but don't start in about climate change being like that, too, because climate and weather are not the same thing. Short term economic forecasting difficulties does not mean that there are no large-scale economic principles that have a known effect.

One of those, which I remember from high school economics class, is one that you interestingly never hear mentioned anymore. Possible that it has been discredited in the meantime, but today I'll entertain a darker speculation. It has to do with inflation.

Inflation, which temporarily whacked the economy pretty hard in the '70's has been beaten into submission and beyond. In the teeth of a severe bout of unemployment and foreclosures, inflation is not only at the low end of the Fed's pretty restrictive target range, it's BELOW that range. And the Fed is moving as timidly as a tormented tortoise in doing anything about that. And few powerful people are prodding it to do more. Now let's see, the investor class owns more of the nation's wealth than ever before. And what was that rule I heard in economics class? That some inflation tends to help people who are in debt and tends to decrease the wealth of the wealthy. Hmm. Just wondering. --Tom Toles

***



