A history lesson in inflation vs. deflation

Does the level of inflation mean Joe Biden isn’t doing a good job?

Without prompt action by Congress and the Fed, we could have deflation and a depression when prices drop but so do wages and employment. Think about the repercussions of the dramatic decrease in demand for restaurants, bars, theaters, and almost anything requiring face to face contact. What would the unemployed do? What about the owners? And associated businesses? Top that with huge disruptions at the ports as we increased demand for imports and the reduction in supplies of semiconductors that interrupted auto production and just about any manufacturing that required computers.

Have you experienced deflation? Suppose the annual CPI (Consumer Price Index) decreased by 2.7 in 2020, the year the pandemic hit? How about a decrease of

8.9 percent for 2021, and 10.3% this year? That was the change in the CPI for 1930, 1931, and 1932 when the unemployment rate was 8.7%, 15.9%, and 23.6%. Check your history books if you think those were happy days!

It’s been too long since the Great Depression for most of us to realize how lucky we are. I remember sitting around the kitchen table hearing my parents, my grandmother, and my uncle talk about days when men called hobos rode the rails in search of work. Rabbits were Hoover hogs. Women used coffee grounds twice before discarding them on the ground to attract worms for hooking fish. Children got “had-medowns” because parents couldn’t afford new clothes.

March’s inflation rate was 7.9% and unemployment was 3.8%.

I’ll take inflation over deflation any day!

— Frederica Shockley, Chico