Tuesday, February 15, 2022

Who Could Possibly Have Predicted It?

      Wages are steady or a little up and savings are up; productivity is still down a bit and has been down worse than that for a couple of years due to the pandemic.

      So, let's see, plenty of money chasing a shortage of goods....  However will that work out?

      The TV news this morning was reporting, with a note of surprise, that inflation was continuing (despite some very stern talk coming out of Washington and the prospect of the Federal Reserve possibly Doing Something) and what a mystery!

      Such a mystery that it wasn't fully described until the 18th Century.  You can still look to David Hume and Adam Smith for insight.

      Presidents bask in the glow of a good economy and cringe at the blame for a bad one.  The fact is, the United States is not and never has been Uncle Joe Stalin's Soviet Russia and our Great Leader in D.C. doesn't run the economy.  Neither does Congress, despite the best (worst?) efforts of Alexander Hamilton and Henry Clay -- though, and for the same reason, the Feds do lay a heavy thumb on the scales.  Nevertheless, there is no magic set of knobs on any President's desk or hidden in the back halls of Congress with dials for Prosperity or Inflation.  It runs on the same human behaviors Adam Smith observed and described, just as it always has.  Presidents and other politicians can cheer the economy on when things are good and try to cheer us up when they're not, maybe hand out some tax money that probably would do just as much good never passing through IRS.

      We're in for a ride until things settle down, and they won't settle down until production of scarce goods increases sufficiently to meet demand.  Until then, we'll want to go easy on the (semiconductor) chips and devices that use them, which is pretty much everything.  It's a much better time to buy a set of wrenches than a new car.

2 comments:

  1. "It's a much better time to buy a set of wrenches than a new car."

    I wish I'd said that. It's a perfect comment on the current situation. :-)

    ReplyDelete
  2. Good points about purchasing 'Tech' items, unless vitally required. When ordering, ask if in stock 'right now', as many are taking orders and shipping 'when available'.

    I'm not an investor-type, but have noticed some knives are falling in price due to people either (1) needing $$$ now, or (2) getting rid of unnecessary. Either way, a lot of formerly expensive cutlery is now more available at lower prices.

    ReplyDelete

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