What Is Happening to Prices?
A MAN and his wife stopped at a grocery store to buy just a few small items. The clerk took the $10 bill (U.S.) that the couple gave her in payment, but returned only 40 cents. The wife, expecting much more change, exclaimed: “Oh, Miss, you’ve given us the wrong change! We gave you a 10-dollar bill!” The clerk answered: “But that IS the right change! Those items now cost $9.60.”
The husband held the small bag of items in the palm of one hand, shook his head in disbelief and muttered: “What’s happening to prices anyway?”
If you shop on any regular basis, you well know what has happened to most prices: they have been on a relentless surge upward. True, prices have been rising for many years, especially since World War II. But never has the increase been so persistent and so much as it has recently.
Nor is the situation confined to just a few nations. The entire world, practically without exception, is plagued by this phenomenon, including even the tightly controlled economies of Communist lands. And this is unique, because never before have all nations undergone such inflation at the same time.
Of course, wealthier persons are not bothered much by most price increases. They can afford to pay more. But the overwhelming majority of people in the world are not wealthy, and many of them are suffering because of what is happening.
In country after country, polls show that people consider their greatest problem to be inflation. They feel as though they are in a trap that is closing in, with no way out. Many husbands work overtime, or on a second job. Many wives also work now; in some lands more than half of them do. Family life is affected, because one of the major reasons for family breakdowns is the fighting over money.
An American housewife lamented: “I wonder whether we’ll ever get ahead.” But while she was wondering about ‘getting ahead,’ others were wondering about survival. A truck driver in Brazil commented: “I’m getting panicky these days with the absurd cost of living. It seems as though there is no way out.” In that same land, not unusual is the situation of one husband who has two jobs, works 12 hours a day, six days a week. His wife teaches sewing and also works as a seamstress at home. They stated: “Caring for a family becomes increasingly difficult.” Indeed, one janitor in Brazil said: “We are not sure whether we are living or just existing.”
It should not be thought that this situation exists only in poorer countries. In the United States, an Atlanta woman works 40 hours a week as a hair stylist and then as a waitress on weekends. She says: “I’d starve to death if I didn’t hold down two jobs; there’s no way I could pay my rent.” Her situation, too, is not all that unusual.
In an African country, a report states that the following is happening due largely to runaway inflation: “More and more people turn to stealing, embezzlement, bribery and any other way they can get money to meet their daily needs.”
In highly industrialized Japan, in one period of about seven months nearly 100 people killed themselves because of troubles caused by sarakin (loan sharks). These people had gone deeply into debt, borrowed at high-interest rates, and could not pay the money back. Unable to face life, they committed suicide.
Historian Arthur M. Schlesinger, Jr., asserted regarding the economic situation: “The party’s over.” He said that the days of unparalleled prosperity in some places must now be changed for discipline, sacrifice and a lower standard of living.
In France, a commentator declared: “The dream of a ‘new society’ of abundance promised toward the end of the 1960’s and extolled during the early 1970’s has died out as inflation has made a lethal attack on the purchasing power in France.” Similarly, in the United States the Encyclopedia Americana Annual for 1979 observed: “The American dream, people said, had become a nightmare.”
Citicorp, a large bank in the United States, concluded: “The unpleasant fact is that the persistent inflation afflicting most countries will, if allowed to continue, ultimately have consequences that go far beyond what is narrowly defined as economic.”
Yes, unchecked inflation can mean much more than just a matter of some people having less. It can threaten the entire way of life of a nation. In fact, in the past it has destroyed the economies of nations. This time, inflation threatens the whole world, and not just economically, but with staggering political and social consequences as well.
Just how much inflation is being experienced now? Why is it happening? What can you do about it? And where will it all end?
[Blurb on page 5]
“I’d starve to death if I didn’t hold down two jobs”
[Blurb on page 6]
“The party’s over,” says economist