I was born in 1968, a year where the economy was not unlike it is today. In 1968 for example, inflation caused many people hardships. Wives complained about a $1.99/lb sirloin steak and even the people had a hard time finding a .50¢ hamburger. Even though today’s consumer prices aren’t what they were back in 1968, the same principles apply to the economy whatever the year. I’m reading a 1968 Time magazine article whereby it states, to keep the economy on a healthy keel, consumer prices should be kept to a 2% increase or less each year. So what happened in 1968? In 1968, prices during an 18 month period that went into that year jumped to 4.3%. Some other fascinating things to note in that article:
Transportation rose 4.2%
Food 4.5%
Apparel 6.6%
Medical care 7.2%
That year our nations GDP was 8.7%, which totaled $860 billion that year which was a lot yes, but almost half of that was due to price increases! The US was experiencing inflation and the effects of the devaluation of the dollar. While this was going on, people and businessmen borrowed, spent and invested quickly trying to turn their cash assets into good and services which did nothing more than to stoke the rising inflation in hopes of beating the loss in value of the US dollar. Back then as is the case today, the economic hardship affected the poor the most. The poor lack the financial resources necessary to invest in solid investments like real estate or paper investments, perhaps T-notes and more. Here’s a parallel of 2009 and 1965: “In 1965, Lyndon Johnson decided that the nation could simultaneously support the Viet Nam buildup and the Great Society. Critics insisted that such policies would push up prices unless taxes were raised. Johnson refused to propose higher taxes. Such a move would almost certainly have prompted Congress to cut back some of his favorite spending programs. Later, faced with soaring federal deficits, Johnson changed his mind and urged a tax increase. But Congress dallied for 18 months—and thus lost an opportunity to halt inflation before it took deep root.” So- what we see here is Johnson thought he could still have his war AND fund all his pet projects all the while without raising taxes." I see today that, President Obama is in the same boat. He’s currently trying to fund IRAQ and Afghanistan while trying to spend without raising taxes. As much as I HATE the thought of raising taxes, they are probably going to have to happen. This to me presents another problem: Since the middle and poor classes have been taxed out their pants as of late, how can we raise taxes? We should ensure that businesses and corporations pay their fair share of taxes. IF everyone from the individual to the biggest corporations paid their fair share, I think we would have a good financial grounding. So, even though the year was 1968, We are back in the same boat, with a different presidential administration but same economic ballgame.
-Christopher Jackson
Sources: Time Magazine 1968
