A LITTLE DEFLATION WOULDN’T HURT
by Tim Tursick
September 5, 2007
I’m no monetary scientist nor a financial wizard yet. Information on the economy, inflation and deflation have flooded all communication avenues as never before possible. So, I read, I listen, I watch. I’m an average fifty year old American concerned about all the personal financial questions of the day: Have I saved enough for retirement? Is the Fed going to make my dollars worthless by the time I finally quit working? Should I buy gold and silver to preserve what wealth I have managed to acquire? Will there be another bubble to invest in that will assure my comfortable retirement?. . . yada, yada, yada.
I daily appreciate the blessings I do have because I know without any doubt that I am substantially better off than the silent, laboring majority. But I also fear because I am not a millionaire. It has been said by many that in order to retire at the same comfort level that my parents worked hard to achieve in their golden years, I will need at least one million dollars when I reach my time to retire. This is one small item usually heard from those who are certain the central bankers will have the desire and ability to control a relatively slow devaluation and ultimate demise of the dollar over time, say the next fifteen years or there-abouts. Good for exports they say. Many are calling for a much faster decline and death with a new currency to be born, taking the place of the green back. I have at times been in total agreement with the inflation/currency devaluation group.
I look through all of the local job listings and there are jobs a-plenty available for those who need to work. Most are low paying, low skill jobs but they exist for those who will work their bodies into poor health to survive day to day. I give scant attention to the official numbers on unemployment and inflation but, I pay detailed attention to my monthly cost of living. I have paid off all debt and I am beginning to buy many items in bulk to achieve lower over-all monthly costs. My monthly food and soft goods budget has largely turned into a quarterly budget because of bulk purchases of dry goods. There is no doubt that inflation in all things required to live is much higher than the government tries to lead us to believe. That is except for wages. Many have made small fortunes with their timing in the markets and they deserve their good fortune. The vast majority of middle aged Americans have lived through wage deterioration over the past thirty years. It is no coincidence that the deterioration of the value of wages has been in lock step with the collapse of unions as we once knew them. I am neither pro nor anti union. Most of America has been sold the half truth that unions are all infiltrated by corrupt crooks and thieves that extort raises from corporations and dues from poor workers. The truth is there were good and bad unions just as there are good and bad corporate leaders. The good and the bad runs through all things we know.
Many very studied people who are much wiser than I in all matters financial are convinced a new bubble will arrive to give those with extra cash another chance to get further ahead. There is a need for infrastructure investment in this country to replace old and worn out bridges, sewer systems, water treatment systems, refineries and numerous other man made systems we count on every day without ever considering the cost. The great industrial boom of the century past was financed by governments and rich men but it could not have been done without the blood, sweat and tears of highly skilled men and women. I speak of the same men and women who fought for unions to help them get the piece of the dream they bled, broke bones and inhaled asbestos for. I wonder where the new skilled labor will come from for all of these new infrastructure needs, I wonder what kind of pay and benefits will be allotted to these people. These people who are our sons and daughters, grandsons and grand daughters.
It seems the coming year of decisions on the value of the dollar by the central bankers will play a bigger role in the future of the USA and other economies as never before, at least, never before in my lifetime. Many of the inflationist’s are convinced we are beginning the end game. A generation is heading into retirement and the succeeding ones will be charged with rebuilding a deteriorating country. Wall Street and the Cramers are begging for a new bubble so they can make more fast money. High yielding fixed income instruments may be the only thing that can securely keep many of the coming retiree’s heads above water during their coming golden years. What is the Fed to do? Bow to the fast money bubble investors or bow to a better vision to sustain a country over time? Perhaps a little deflation would be better in the long run, in the long term vision of what a country needs to really sustain the next generations, our kids.
T.P. TURSK