I don't usually do this. It has been only a few days since I last said anything in public (i.e. here), and the subjects of economy and politics have little if anything to do with me. Nevertheless, I feel compelled to vent a bit about a "doom-and-gloom" article that I just read on cnn.com. Apparently, according to the author and countless people who know far more about such things than I do, I should be very nervous about the fact that inflation decreased by 1% in October. I am told that this is fancy talk for "prices dropped by 1% in October." We can all see why that's good for us (consumers), but it is apparently bad for everyone else, and ultimately will be bad for us too. The reason for this is simple (quoting the article): "If prices fall below the cost it takes to produce products, businesses will likely have to cut production and slash payrolls. Rising unemployment would cut demand even further, sending the economy into a vicious circle." See, that's bad news. Right?
I'm no economistician, but it seems to me that maybe the people writing these articles are stupid. According to the article, prices - measured through inflation, I guess - have risen consistently to reach a "17-year high" in July. What happened in July? Oil prices started to fall. Then they continued to fall. Finally, they're still falling. Nonetheless, it is a threat to our very survival if prices, which have been rising steadily (2-3% seems like a decent general estimate of annual inflation in the U.S. over the past decade) ever since some time a LONG time ago, stop rising at an unusually fast rate. Even with the recent drop in prices, our annual inflation is at 3.7%, and it's still just November. Nobody knows where we'll go from here, but my guess is that we'll keep dropping to the 2-3% range for the year like we've had in previous years.
"If prices fall below the cost it takes to produce products..." Yeah, that'll be the day. Wal-Mart has suddenly decided to be a not-for-profit organization, donating all its merchandise at cost or below. The whole world has gone crazy, and money is no longer a thing to be grasped. IF prices WERE ever to fall BELOW cost (and I insist that they never will), we'd all just run right out and buy them, then sell them on ebay. The morons who somehow started selling things at a loss would realize their error and jack the prices back up to the profitable section in their scales. And I suppose then some genius at cnn.com will write an article about how great it is for everyone that prices are skyrocketing again (I didn't notice such an article while gas prices were shooting through the roof, but maybe I just missed it...).
So my advice for now is that we all panic (like Real Madrid!) and make a bunch of split-second decisions based on one measure of our economy's growth. That way, we'll at least know we reacted soon enough, right? Don't take my word for it, but I'm predicting that prices drop for a bit longer, to catch up with where they should have been before oil prices were artificially inflated to ridiculous heights (that's my accusation for the day), or perhaps a little lower, just to teach them a lesson. Hopefully enough Americans (U.S. Americans, in this context) have made permanent lifestyle changes in response to the events of the past couple years that we won't have to deal with the repercussions of another "oil crisis" ever again.
P.s. To anyone who is willing to prove me wrong (I'm looking at you, Martin, Taylor, Gibson, Olson) by offering me something for nothing, or for less than cost: I'm willing to consider your donations!
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