Inflation: A cyclical downward spiral that is again repeating itself

Can we apply a little common sense here? If the Fed is going to raise interest rates to “combat inflation,” it makes common sense to ask how raising the cost of every bank loan, every credit card, every mortgage, every business bond, and, of course, every salary to compensate for that raise in the cost of money is going to lower the rate of inflation? The Feds argue they must fight fire with fire. Just be careful how much gasoline the Feds pour onto a blaze they began.

It’s like the forest fires across the country; most are caused by “controlled burns” to reduce flammable material littering those forests. If you don’t handle them just right they can explode into hundreds of thousands of additional fires. Yet no one asks: Why the heck are you starting fires in the dry season? Ah, but those Feds always know best.

Back to inflation: Exactly how is raising the cost of everything going to help normal people make ends meet? It won’t, is the obvious answer.

Look, there are only two ways the National Debt can be repaid. In Switzerland, they once chose to raise taxes for two years — punishing as that may be — and they paid off their national debt as a matter of national security.

In the USA, four times during my lifetime, our government has used “inflation” as an excuse to raise interest rates, causing prices to rise everywhere — homes, rents, food, salaries. Once the Feds put “inflation” rising interest rates in place, you can start counting two to four years before a new level of much higher prices stabilizes.

Nixon took us off the gold standard so he could play with interest rates. Reagan allowed the mom-and-pop savings banks to become real estate and business traders and loaners, flooding money into the market at high risk, and banks failed. Bush/Cheney lied about the National Debt and, in 2008, inflation struck again. Trump over spent, locked down and taxed imports, and reduced the immigrant workforce.

Nixon left in ’73, and within four years inflation doubled. Reagan left in ’88, and prices doubled before Bush Sr. left office. Bush/Cheney left in 2008, and the banks failed. Trump left in 2020, and here we are, almost two years later, and inflation has struck — hard — again.

So what happens when inflation goes rampant? To finance D.C. spending, the U.S. government sells bonds, Treasury Notes, which have a fixed value and are non-index (inflation) linked.

A $100 U.S. Treasury note falls in real value when inflation hits. That value is crippled by inflation. A Ford station wagon in 1978 cost around $4,500; that size car today costs $25,000. A house that sold in Amenia for $65,000 in 1982 resold in 1989 for $330,000. The car your family needed in 2007 cost $8,500; it now costs $25,000. A house in Phoenix, Ariz., that sold in 2016 for $275,000 sold last week for $1,100,00, without any improvements.

Even allowing for today’s car being 30% better made and longer lasting, that’s still a heck of a jump for a heap of metal.

So, did you cause this inflation? Nope. Can you control this inflation? Nope. How can you cope with this inflation? Well, the quicker you ask for a raise, the sooner you can protect your family.

Here’s the downside… and why the Fed is acting slowly: If inflation becomes rampant, you will end up buying a loaf of bread with cash carried in a wheelbarrow.

So, what is America to do? So far, the Feds inflate interest rates to slow consumer buying, all with the hidden aim of reducing the value of those Treasury Bonds. It worked three times after Nixon took us off the gold standard.

Will it work a fourth time? The pain will be measurable for every working American, every retiree, every military family and especially for people who save in banks at ridiculously-low interest rates. That’s guaranteed. That buck you saved? Within a year it’ll be worth 60 cents.

As long as we spend and tax without constraint, the government can only protect the really wealthy and the power the U.S. dollar wields worldwide one way. In the end, the middle class will be gone forever, the poor will become poorer and the American work ethic will be valueless. It’s a downward spiral we’re caught in once again.

Former Amenia Union resident Peter Riva now lives in New Mexico.

The views expressed here are not necessarily those of The Millerton News and The News does not support or oppose candidates for public office.

Latest News

Clothing distribution, poultry theft, 
fire destroys 80 acres

The following excerpts from The Millerton News were compiled by Kathleen Spahn and Rhiannon Leo-Jameson of the North East-Millerton Library.

April 18, 1935

Keep ReadingShow less
Amenia Library welcomes new Adult Programming Assistant

Liz MacQuarrie began her duties as Adult Programming Assistant at the Amenia Free Library in mid-March, has launched creative new programming.

Leila Hawken

AMENIA — New adult programming is coming to the Amenia Free Library, led by Adult Programming Assistant and Millbrook native Liz MacQuarrie.

Since beginning her duties in mid-March, MacQuarrie has been learning the ropes of library procedures. She spoke on Thursday, April 9, about her enthusiasm for serving the community and developing adult programs for library users.

Keep ReadingShow less
Local climate advocates gear up for annual Earth Day events

MILLERTON — The Climate Smart Task Force is gearing up for a busy April.

Millerton and North East’s joint Climate Smart Task Force is a group of community volunteers who work to promote green initiatives in the community that earn the town and village points toward grant funding opportunities. The group is part of a statewide initiative known as Climate Smart Communities that promotes environmentally conscious policies at the municipal level.

Keep ReadingShow less
google preferred source

Want more of our stories on Google? Click here to make us a Preferred Source.

Sharon man brings Death Cafe to Tri-Corner 
F.E.E.D., sparks conversations about dying

Tri-Corner F.E.E.D. in Millerton.

Aly morrissey

MILLERTON — Christophe Armero thinks talking about death is a good thing.

That’s why he started a “Death Cafe” at Tri-Corner F.E.E.D., a regular event at the South Center Street store where people are invited to enjoy coffee, cake and casual conversations about death. The next event is scheduled for Wednesday, April 29, at 6 p.m.

Keep ReadingShow less
Chion Wolf brings ‘Audacious’ radio show to Winsted with show-and-tell event
Nils Johnson, co-founder and president of The Little Red Barn Brewers in Winsted, hosted Chion Wolf and her Connecticut Public show “Audacious LIVE: Show and Tell,” which was broadcast on April 8, drawing a sold-out crowd.
Jennifer Almquist

The parking lot of The Little Red Barn Brewers in Winsted was full on Wednesday, April 8, as more than 100 people from 43 Connecticut towns — including New Haven and Vernon — arrived carrying personal treasures for a live taping of “Audacious LIVE Show & Tell.”

Chion Wolf, host and producer of Connecticut Public’s “Audacious,” and her crew, led by production manager Maegn Boone, brought the program to the packed brewery for an evening of story-driven conversation and shared keepsakes.

Keep ReadingShow less
Marge Parkhurst, the preservation detective

Marge Parkhurst with a collection of historic nails recovered from wall cavities during restoration work.

Photo courtesy of Marge Parkhurst/Cottage & Country Painting Company
Walls still surprise me. If you look hard enough, you can find buried treasure.
Marge Parkhurst

After nearly 50 years of painting some of Litchfield County’s oldest homes and landmark properties, Marge Parkhurst has developed an eye for the past—reading the clues left behind in stenciled vines, forgotten bottles and newspapers tucked into walls, each revealing a small but vivid piece of Connecticut history.

Parkhurst was stripping wallpaper in a farmhouse in Colebrook — the kind of historic home she has spent decades restoring — when she noticed something odd. Three layers of paper had already come off — each one a different era’s idea of decoration — and beneath them, just barely visible under dull, off-white plaster, a pattern emerged.

Keep ReadingShow less
google preferred source

Want more of our stories on Google? Click here to make us a Preferred Source.

google preferred source

Want more of our stories on Google? Click here to make us a Preferred Source.