Inflation is Good

http://www.nytimes.com/2009/02/11/business/economy/11leonhardt.html?_r=2&emc=eta1

http://www.nytimes.com/2009/02/16/opinion/16krugman.html?partner=rssnyt&emc=rss

I am so grateful for these two articles above. For months I was debating about the recession with friends and finally the things being published are starting to sound more and more like what I have been preaching. The first article states that saving and spending are both bad and both good. My friends keep insisting that the problem is that people are not spending enough. My stance is that spending more could not solve this problem. The article explains that when banks need money, saving helps banks because it keeps more money in the banks for the banks to work with. The second article talks about how WW II created jobs and inflation that made the prior debts seem only half as daunting because the real value of the debt shrank thanks to inflation. Finally there is in print something that states inflation is good! Inflation, again refers to increased wages. Increases in the cost of living for the working class is not what is meant by inflation. In 2008, I watched article after article decree that inflation is still down as my cup of coffee and bagel went up 30% along with gas prices one month in May. I am ecstatic to read Paul Krugman tell us that inflation saved us during WW II.

I haven't posted in months and there are several drafted but unedited blog posts that I never bothered to publish because I was tired of arguing a confused sounding point. Especially now that we are losing hundreds of thousands of jobs monthly, my friends look at me cross-eyed when I say, "I don't think it's such a terrible thing." For the poorest of us, making minimum wage with family that cannot offer a safety net, it really stinks. But if unemployment goes from 5% to 8%, that's only 3% of the working population that needs to receive support from the remaining 92% of the working population. That is really a small number if you consider that prior to women entering the workforce, the working population was a much smaller portion of the general population than it is now. For someone like me, and I sit in the middle of the middle income/middle class, it's sort of a relief that we are all snapping out of this delusion of spending. And though I am, by national standards, a little higher up than the middle of the middle, in the Bay Area, I was NOT making a living wage.

For the first time in my life, I am fine with having a roommate. If I am unable to find decent work in the next 9 months, the time it will take for my unemployment insurance to run out, I will move in with my parents, something I would have never ever thought was ok. I bake bread now and spend hours and hours with my kid. I am really enjoying this slump, partly because, it is no longer an imperative that I eat out two to ten times a month or go to the movie theatre every other weekend. I don't need new clothes and because most people are in the same boat, most of my friends are asking if I want to come over and cook dinner together as apposed to dinner and drinks out.

Perhaps those who identify with shopping and certain amenities get depressed at the thought of losing certain comforts but for me, I feel freed from a life style that did not make me any happier but deluded me into thinking that living with less would make me less happy.