Paul Krugman has just issued a column charging conservatives with being “addicted to inflation,” not that they are pro-inflation necessarily but that they believe, and always believe, that hyper-inflation is imminent. Well, we had the real thing back in the 1970s; the cover price of the major news magazines of the day jumped from $.25 to $2 within the space of months, and Nixon’s attempt to control it through price controls led to shortages of toilet paper. They talk of ‘preppers’ today, but the survivalist movement of that time, which sought ways of living without having to depend on outside inputs of electricity, water, natural gas, and the easily availability of food stores, was bigger than today; and it was linked with the hard money movement, which believed that gold and silver was much better than fiat currency because it could not be ‘printed’ at will. Incidentally, it has been forgotten how much the hard-money and survivalist movements contributed to the revival of the New Right in the late 70s and early 80s. I would in fact argue that they contributed just as much to it as the more publicized Religious Right, with which they overlapped.
In 1981 Ronald Reagan succeeded to the Presidency, and his first act was to remove the price and other controls on petroleum products. The price of gasoline went down, and there was a glut, and the economy of Houston, Texas – Houston, of all places! – suffered, and people were trying to move out. And the prices of most consumer products ceased to skyrocket as well.
Krugman declares, “At worst, inflationistas resort to conspiracy theories: Inflation is already high, but the government is covering it up.” How about another possibility? Inflation has proceeded apace in three areas; health care, tuition [for public schools, this is included in the price of housing], and housing. Technology and globalization have masked it in most consumer goods, most of the time. If one takes the rate of inflation in health care, tuition, and housing as the ‘real’ rate, incomes for the majority have dropped, but consumer goods have become cheaper at mostly the same pace or faster, at least until the crash of 2008. Another way of putting this is that Wal-Mart gives back with one hand what it takes away with the other. But there are certain things Wal-Mart doesn’t do!