Do We Have to Watch Their Wretched Movie All Over Again?
Why do I feel that I have seen this movie before?
I would like to think that learning is cumulative. But I'm beginning to think that every generation or two, people need to learn all over again the lessons that have unaccountably been forgotten or tossed aside. The elderly among us can see this, even as young people are inclined to insist that they are experiencing things never before experienced by humans and that this time will be different.
Let's take it issue by issue:
The consumer price index for June rose on an annual basis before seasonal adjustment by 5.4%. That's higher than May, which suggests that inflation is accelerating. And it's far above the 2% annual rate, which is the professed goal of the Federal Reserve. Treasury Secretary and former Fed Chair Janet Yellen insisted that the jumps in prices are just temporary adjustments to the COVID-19 economy, although she's extended the period for adjustments. Current Fed Chairman Jerome Powell said he's not worried and will keep interest rates low.
They've got the bond market on their side. But those expressing alarm include not only the Wall Street Journal editorial page but also Harvard economist and Clinton administration Treasury Secretary Lawrence Summers. He's been arguing for months that President Joe Biden's administration is pumping too much money into the economy.
Consumers may agree: A New York Fed survey showed they expect a 4.8% annual rise in prices over the next year. We learned in the 1970s that once people start expecting inflation, they start to feed it by raising prices and boosting wages to keep ahead of the trend.
We know how to get rid of inflation. Former Fed Chairman Paul Volcker -- appointed by Jimmy Carter and supported by Ronald Reagan -- raised interest rates and triggered a steep recession from which a low-inflation growth economy eventually emerged. Are we ready for that kind of pain again?
Calendar year 2020 saw a 25% increase in homicides, the highest since 1960 and higher than in any single year in the 1965-75 decade when the number of violent crimes almost tripled. They seem to be rising by similar rates this year.