Page 2 THE MALDEN ADVOCATE–Friday, November 12, 2021 ~ Guest Commentary ~ Specious Theories Concocted to Justify Inflation By Dr. Mark W. Hendrickson F rom an economic point of view, some of the ideas being proposed by current policymakers in Washington, particularly the president’s Council of Economic Advisers and top officials at the Federal Reserve, cause this economist to scratch MPR ENGINEERING CO. AFFORDABLE & COST EFFECTIVE Civil Engineering * Certified Plot Plans Surveying * Boundaries * Flood Zones Call for FREE Estimate: (781) 629-2891 ~ LICENSED & INSURED~ Lawrence A. Simeone Jr. Attorney-at-Law ~ Since 1989 ~ * Corporate Litigation * Criminal/Civil * MCAD * Zoning/Land Court * Wetlands Litigation * Workmen’s Compensation * Landlord/Tenant Litigation * Real Estate Law * Construction Litigation * Tax Lein * Personal Injury * Bankruptcy * Wrongful Death * Zoning/Permitting Litigation 300 Broadway, Suite 1, Revere * 781-286-1560 lsimeonejr@simeonelaw.net SABATINO INSURANCE AGENCY Call for a Quote 617-387-7466 Or email Rocco@sabatino-ins.com We cover: * Auto * Home * Boat * Renter * Condo * Life * Multi-Policy Discounts * Commercial 10% Discounts * Registry Service Also Available his head in wonderment. Take the Fed, for example. The central bank hatches policies wielding major economic impact, and yet the explanations and rationale for its policies can seem bizarre, self-serving, or just plain glib. With inflation having become an issue this year, the powers that be are devising some bogus “economic theories” that portray today’s higher inflation as a supposedly good thing. The Wall Street Journal’s Greg Ip recently reported on some of these “theories.” For example: “Economic theory says modestly higher, stable inflation should mean fewer and less severe recessions.” Oh, really? In the first place, the Fed hasn’t hit its inflation target for many years, so it doesn’t have any demonstrated ability to guarantee “stable inflation” at any level. Second, both high and low inflation periods have been followed by recessions. Thus, to suggest that there is a magical inflation figure that is a recession tonic is specious. In fact, inflation destabilizes the economy by increasing the uncertainties about the prices that both consumers and producers face. Inflation-induced price dislocations complicate economic decision-making, discombobulate production and employment, and so are one of the causes of inflation. Mr. Ip also reported that “if inflation ends up closer to 3% than 2% next year, raising the [Fed’s inflation] target would relieve the Fed of jacking up interest rates to get inflation down, destroying jobs in the process.” In this fairy-tale view, the experts are saying to simply let inflation rise–that is, let the purchasing power of our currency erode at a faster pace–and we will avoid economic pain. Question: If avoiding painful economic adjustments, such as shifts in employment, were simply a matter of boosting prices, why didn’t earlier generations of central bankers adopt permanently expansive monetary policies to create constant inflation and uninterrupted economic bliss for the people? This is the silly superstition (popular today under the rubric of Modern Monetary Theory) that the way to raise standards of living is to print more money. Again, if wealth creation were that simple, the process would have been mastered centuries ago and nobody would be poor. Instead, money printing can lead to hyperinflation–the destruction of money–which it already has in over 50 countries, always resulting in extreme societal impoverishment and disruption. Ip further writes, “In bad times though, inflation allows an employer to cut labor expenses by freezing pay so inflation gradually reduces real wages. That isn’t possible with zero inflation: The employer would have to cut jobs or pay.” Sorry, but workers have seen through that illusion for many decades with numerous union contracts including COLAs – cost of living adjustments – that protect workers against inflation’s not-so-stealthy real pay cuts. Also, American economic history includes periods when wages fell, but standards of living rose. To say that INFLATION | SEE PAGE 11 Menorah Lighting set for Dec. 5 http://www.sabatino-ins.com SABATINO 564 Broadway Everett, MA 02149 617-387-7466 Hours of Operation are: Mondays - Fridays 9am to 5pm Saturdays by appointment only The City of Malden and the Chabad of the North Shore invite residents to the Malden Public Menorah Lighting on Sunday, December 5 at 5 p.m. on City Hall Plaza at 215 Pleasant St. This Festival of Lights is open to all, and everyone is welcome to come learn more about the Jewish celebration of Hannukah. Mayor Gary Christenson will offer greetings, and residents are invited to enjoy live music, crafts for kids, prewrapped treats and more. The event will be held outdoors and will be streamed live on the City of Malden’s Facebook page. (Photo Courtesy of the City of Malden)
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