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The Empire on June 19 reprinted an oddly educational St. Louis Post-Dispatch editorial, "New Kind of Funk," that's worth thinking about.
The editorial said now is like 1970s US "stagflation" (stagnant economy and price inflation), but claims this time it's different.
Yes and no.
President Johnson didn't increase taxes to pay for war in Vietnam. He had enough political problems. But war is expensive. Not paying taxes for war often leads to later inflation and weak currencies.
Now, instead, President Bush lowered taxes to pay for two wars, Afghanistan and Iraq. Republican Bush far exceeded Democratic Johnson. Did Johnson borrow billions abroad, as Bush did?
The editorial said inflation now increases as the US economy slows. Isn't that like 1970s stagflation? What's different?
The editorial blamed rising fuel prices mostly on developing nations like China. Even TV newscasters by spring 2008 also blamed falling dollar values. But few say - or even ask - what caused dropping dollars?
The editorial uncritically accepts changed statistics, incredibly saying, inflation is low, if you don't count food and fuel. (Remember Mark Twain: "lies, damn lies, and statistics.")
Why redefine "inflation" to exclude rising fuel and food prices? (Remember George Orwell: "All animals are equal" too soon becomes "some animals are more equal than others.")
The editorial observed other countries aren't suffering economically. Did other countries debase their currency by paying for two wars with a tax cut? Who else compounded continuing trade deficits with borrowed billions?
The editorial implied the Federal Reserve for political reasons won't raise interest rates before November elections. (More unemployment would be "politically risky.") Maybe, but isn't the Fed supposedly apolitical? What's going on? Why?
Is this really "new, uncharted territory"? Or do we now experience readily foreseeable consequences of paying for two wars with a tax cut and borrowed foreign billions?
Thanks for reprinting such an educational, odd editorial, to get your readers thinking.
Formerly of Juneau