What’s Happening to Prices?
IF YOU go shopping regularly, you know what is happening to prices. In just about every country in the world, the price of nearly everything keeps going up.
True, at times prices have remained steady, or have even declined a little. But before long, they have gone back up to new highs. That has been the trend for many years since World War II.
This relentless upward movement of prices is discouraging to many families with limited budgets. It distresses them to see that products cost more, services cost more and that taxes of all kinds keep increasing. And during 1973, prices in many lands rose more swiftly than at any time in several decades.
The word most commonly used to describe what has been happening is INFLATION. A dictionary defines it as “a substantial rise of prices.”
Inflation means that everybody pays more for things. It also means that incomes usually go up. But—and here is where a big problem arises—the incomes of many people do not increase enough to keep up with inflation. As a result, their standard of living goes down, since they cannot afford to buy as much as before.
In this group are many retired and elderly people who have to live off fixed, or barely rising, incomes and pensions. Then there are many ‘middle-class’ wage earners who are unable to keep their salaries going up fast enough. But those who usually suffer most are many unskilled laborers and poorer people. They are in no position to demand the higher and higher incomes needed to keep up with rising prices.
Of course, inflation benefits some—those whose wages or investments grow faster than the rise in prices. These people can afford a better standard of living. But often they are the very ones who were better off to begin with.
So while inflation benefits some, it is a growing disaster for others—the many elderly, middle-class and poor persons who cannot keep up. For these people inflation is a thief, a thief that robs the most needy.
Hence, even in the midst of ‘peak prosperity,’ much of the population is left behind and ends up worse off. In the United States, the richest nation on earth, the government lists about 26,000,000 people as officially living in poverty. One out of four elderly people lives in poverty. Half of all widows over sixty-five are either at or near the poverty level. In addition, millions of other people have incomes so low that they are not far from poverty.
Since that can happen in the richest nation on earth in ‘good’ times, many wonder: What will happen in ‘bad’ times?
Inflation Worsening in the United States
Inflation has afflicted practically every nation on earth since World War II. But political and economic leaders in the Western world worry about one nation more than others—the United States.
The United States has been the central pillar, the foundation of the Western world’s economy for more than a quarter of a century. Because it produces and sells more goods and spends more money abroad than any other country, what happens there has a profound effect on all Western nations. As one person expressed it, ‘When the United States sneezes, the rest of the Western world catches cold.’
The economic picture in the United States has caused great concern for the past several years. The persistent trend has been toward higher and higher prices. Nothing the government has done has been able to stop the march of inflation.
Commenting on this situation, U.S. News & World Report says:
“A look at the record since World War II is not very encouraging to anybody who uses American dollars to determine his way of his life—and that means all of us. In the 28 years since the end of World War II the ‘consumer price index’—a measure of the cost of living compiled by the U.S. Department of Labor—has risen 144 per cent.
“That means, on the average, an item that cost a dollar in 1945 costs $2.44 in 1973. The dollar you had then is now worth 41 cents.
“Prices went up in 26 of those 28 years. When they went down, the declines were quite small.”
During the entire period of twenty-eight years since 1945, the average price increase each year was about 3 percent. But during the twelve-month period ending in mid-1973, the rise was double—about 6 percent.
Yet in the last half of 1973, since the above news item was published, prices of many things increased even faster. Late in 1973 prices were released from the “freeze” the government had earlier clamped on them. The result was that prices of many things soared, especially food products.
In New York food prices skyrocketed 4 1⁄2 percent in one week during August. In that week the price of frying-size chickens rose 24 percent, bread and cereals jumped over 10 percent and fish about 7 1⁄2 percent.
During 1973 the price of many basic commodities such as wheat, corn, lard, wool and rubber more than doubled. That meant, of course, that there would eventually be further increases in the end product when those basic commodities were processed into consumer goods.
The change in the food situation of the United States has been startling. For years the government paid farmers not to plant all their land because of huge food surpluses. But now the demand for food is so great, by both Americans and people of other nations, that the government is telling farmers to plant all they can. And still, food prices go up!
This situation prompted a high official of the Cost of Living Council to say: “What we have to do is educate people—educate them that the days of cheap food are over.”
Thus, the average American finds that it keeps taking more and more dollars to buy the same amount of things. That, of course, means that his money is worth less and less.
Dollar Takes a Beating Overseas
In addition, overseas the American dollar’s value has taken a bad beating in recent years. Its worth has decreased strikingly in relation to the money of other nations.
Especially from the spring of 1971 to the spring of 1973—in just two years—did its value plunge. For instance, an item that cost $100 in American money overseas in the spring of 1971 cost the following in the spring of 1973 in these sample countries:
West Germany $158
Of course, these comparisons vary from day to day, sometimes higher, sometimes lower. But the long-term trend in recent years has been that a dollar buys less and less in other countries, just as it buys less and less within the United States.
The Record of Other Nations
Yet inflation is not just an American problem. The money of most other countries now buys less for their citizens too.
The American Institute for Economic Research recently reported: “Great inflations are not something new in the world, but heretofore they have not been worldwide. In the past quarter century, with the aid of U.S. dollars, nearly all nations have participated [in the inflation].”
So for the first time in history, a very unique economic situation has come about—inflation is happening all over the world at the same time! It is also noteworthy that in the past year the inflation rates of most nations have taken a sharp turn upward. The Wall Street Journal listed the following examples, comparing the percentage increase in inflation for all of 1972 with the three-month period from February to April of 1973:
Inflation Rate Inflation Rate
Country for all 1972 Feb. to April 1973
———————— ————————————— ——————————————————
Ireland 8.7 18.2
Japan 4.5 16.4
Italy 5.7 12.7
Greece 4.4 11.0
Switzerland 6.7 10.9
Finland 7.4 10.7
Spain 8.3 10.0
Thus, the grim fact was that inflation no longer rose at the rate of 4 or 5 percent in many lands, which was bad enough. At a 5-percent increase in prices each year, what takes $100 to buy today will take about $200 in fourteen years. But at a 10-percent rate of inflation, prices will double in just seven years!
The fact that inflation rates have doubled in size in many countries was considered very dangerous. Authorities worried that inflation had become a fire feeding upon itself. As the Organization for Economic Cooperation and Development, a twenty-four-nation government group based in Paris, stated:
“There must be a serious risk that when, in [democratic] societies, the rate of inflation advances toward double figures, a progressive acceleration will set in, because anticipatory action by various economic groups becomes too strong and too widespread for effective control.”
What these experts are saying is that when inflation continues too long and gets too high, economic groups such as farmers, merchants, manufacturers, labor unions and others begin to feel that more inflation is inevitable. So they all begin demanding higher wages and prices. It gets to be a vicious cycle, growing faster and faster, like a snowball rolling downhill.
That kind of self-feeding inflation is very hard to control. The inability of the United States to stop its inflation, even with government intervention, proves the point.
As is the case in the United States, one of the largest price increases in other nations has come in food products. Regarding meat, Business Week reports:
“It may not be much consolation to the American housewife, but her lament over ever-increasing meat prices is being echoed even more loudly overseas. And with good reason. In Britain, retail meat prices rose more than 15% last year, . . . in France, where meat prices have soared as much as 40% in the past 18 months, . . . Japanese beef prices [are] up 25% over the past year.”
The Seattle Times notes that in Japan, for example, a half-pint of milk that cost 9 cents in 1968 cost 16 cents in mid-1973. A hair treatment that cost 35 cents rose to $3.50 in the same five-year period. An hour-long local telephone call that cost 3 cents jumped to 53 cents in that time. And in just one year lumber prices rose a startling 59 percent.
Because of this ominous trend everywhere, Business Week said: “In a real sense, it is not just the dollar that is in trouble. It is all the currencies in the non-Communist world.”
There is obviously much dissatisfaction on the part of shoppers everywhere. That is causing governments to worry. They fear that if things continue as they are, people will get disgusted and take drastic action.
Economic problems in the past have resulted in governments being voted out of power. In some countries, they have caused the overthrow of government by violence.
Typical of the concern is the comment that the Seattle Times makes regarding Japan: “Government and business leaders, shaken by Communist and Socialist gains in the last election, have announced that they fear popular unrest and a serious challenge to Japan’s capitalist system.”
This fear of unwanted reactions was also noted in The Wall Street Journal. It said: “As Alvin Toffler’s book ‘Future Shock’ expounds, ‘Things are happening faster’ in many spheres of human activity. When change in such matters as knowledge, transport, communications, family life and economic activity accelerates so swiftly, he warns, there can be profound reactions.”
U.S. News & World Report adds the following regarding the growing dangers of inflation:
“Inflation—steady, unrelenting advances in the prices of goods and services—is a cancer.
“It destroys savings. It takes the security out of old-age security. It gnaws away at earning power, eventually reduces jobs.
“What lies in wait at the end of the line? Historically, social disorder, even total economic collapse, have been the progeny of continuing inflation. It has happened over and over again. When a people’s medium of exchange becomes worthless, then the whole economic system becomes unhinged.”
Thus, inflation is like a balloon. A balloon can be filled with air up to a point, depending on its size and strength. But when too much air is pumped into it, the balloon will always ‘burst.’ That is also true of constant economic inflation; it eventually leads to an economic ‘bust.’
Is there a real possibility that such an economic disaster is ‘just around the corner’? Is that where your money is heading?
The End of Money Problems
There is every reason to believe that the answer to those questions is, Yes. From the economic viewpoint alone, authorities agree that throughout history every case of rampant inflation has ended in the destruction of that nation’s money. Time and again this has happened, without exception.
Since it is apparent that the money systems of the world are built on very fragile foundations, would it not be good to have a system that could eliminate economic uncertainties? But is a stable economy and the ending of money problems just a dream? No, it is not. In fact, it is a certainty!
This is what we learn when we consult the inspired Word of God, the Holy Bible. Many of its prophecies have already been fulfilled with unerring accuracy. That gives us confidence that those prophecies dealing with our time will also come to pass without fail. And that prophetic Word of God shows clearly that we are living in the final years of this distressing system of things. (2 Tim. 3:1-5) Soon God will intervene in man’s affairs and bring to an end the economic as well as political and religious systems that have worked against the best interests of both God and man.—Dan. 2:44; Rev. 18:21-24; 19:11-16.
When the time comes for God to demonstrate his power and to execute his judgments, world affairs will become the most severe in all history. Jesus Christ, in his great prophecy about the ‘time of the end,’ where we now live, said that then “there will be great tribulation such as has not occurred since the world’s beginning until now, no, nor will occur again.” (Matt. 24:21) That enormous turmoil will mean, of course, the most intense upheavals in the economic field too.
As the Bible shows, this will pave the way for a system of government that will solve permanently all economic difficulties. That government is the one Jesus taught his followers to pray for, the heavenly kingdom of God.—Matt. 6:10.
God’s rule will usher in an unprecedented era of justice and prosperity. Concerning the Kingdom government in the hands of Jesus Christ, who is greater than Solomon, we are promised: “Let him judge the afflicted ones of the people, let him save the sons of the poor one, and let him crush the defrauder.” At that time “there will come to be plenty of grain on the earth.” And since food will be produced and distributed under the supervision of a government founded on God’s superior wisdom and justice, never again will high prices, shortages and hunger plague mankind.—Ps. 72:4, 16; Luke 11:31.
Because of what is certain to come in the near future, you do well not to place your trust and hope in money nor in other material things. In the coming social and economic upheavals, material things could be swept away in a moment of time. It is, instead, to the new order of God’s making that one should look for the solution to all of man’s problems, including the economic ones now troubling him so much.
[Graph on page 8]
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Retail prices have risen twice as fast as industrial wages
AVERAGE HOURLY EARNINGS
Jan. Feb. Mar. April May June July
PERCENT RISE, U.S.A., JAN.-JULY, 1973
[Picture on page 9]
NEW YORK POST, August 15, 1973
Food Prices Soar 4 1⁄2% in 1 Week
THE WALL STREET JOURNAL, August 2, 1973
Rising Inflation, Especially in Food Prices, Can’t Be Prevented, Nixon Economists Say
The Seattle Times Sunday, May 6, 1973
Normal consumer loses out
Inflation is cause of discontent in Japan