I have long believed that there has been a great deal more inflation in the U.S. economy than official figures indicate, and that this has been true since at least the early 1990s. The stock market, housing and commodities markets of the last 15 or so years are ample proof that more dollars have been out there chasing goods and services. The global economy of the 1990s, which meant falling prices on numerous manufactured goods, was able to hide a great deal of that inflation from typical consumers, but it was there, in bourses and real estate and now bushels and barrels.
Joshua Holland at Alternet has a piece today looking at stagflation in the US and how the gummint has changed how inflation is calculated since the 1970s to deliberately under-report inflation. Holland’s piece is interesting, not as deep as it could be, but it thankfully lacks much of the “progressive” nonsense that characterizes Alternet pieces. Holland concludes, based on 1970s methodology, that the current US rate of inflation is about 9.5 percent.
(Holland, of course, also misses entirely the real cause of inflation, which is the central bank’s running of the printing press — both real and electronic. The Left needs central banking for its well-managed social democratic world.)
In addition, Holland says that because inflation is underestimated, economic growth is overestimated. The US economy has not grown anywhere near as much since the 1980s as “official” statistics say.
The picture Holland paints, and one I am sympathetic with, is that of an inflation-plagued economy that has been growing slowly or not at all for at least 30 years. An economy dominated by government spending, especially a sprawling and bloated war machine. It sounds an awful lot like Leonid Brezhnev’s USSR, a state and society no one could fix.
7:25 am on July 31, 2008
