The Post-Journal  

The Cursed Reality Of Inflation

                                                                                    APR 27, 2024

ROLLAND KIDDER

 

A reader of this column sent me a letter asking my views on this subject. Though not an expert on inflation, I do have my opinions about it.

My father likely had a great influence on me in regard to this issue. He believed that inflation was the bane of all and an enemy especially of the prudent saver. “The money you save will depreciate in value,” he would say. He was especially suspect of life insurance that would pay out a designated dollar amount: “The dollars you put in won’t be as valuable as the dollars that are finally paid out to your heirs.”

He hated inflation and it was one of the reasons, I believe, that led him to begin, in a small way, investing in stocks. As a dairy farmer, everything he earned on the farm went back into the farm. However, if non-farm income was realized – like the proceeds of the sale of a parcel of land – he would, after much research, invest that in stocks as a way to try to offset the impact of inflation. (This was back in the days before mutual funds, IRA’s or the 401(k).

He would not invest in very small or untested companies. He would look at companies that had a track record, evaluate their earnings, their price/earnings ratios, their debt…before making his decisions. He called it “value” investing. He would check regularly through reading Barron’s or some other investment publication on whether or not these companies were continuing to follow a prudent business plan.

He couldn’t control the price of milk (which usually never kept up with inflation,) nor with the cost of farm machinery which always kept rising at least, if not faster than the rise in inflation. So, he did what he could with these stock investments to try and offset the deteriorating value of money – which to him defined inflation.

There are a lot of causes for inflation–federal deficit spending, increasing wage rates, the cost of food, housing, energy, etc. But, what my Dad finally came to conclude was that inflation, no matter the cause, was a curse that would always be around and was something he couldn’t control.

Fortunately, we live in a country where at least one major economic player continues to try to tamp down inflation – and that is the Federal Reserve Bank. Though its primary means of doing so is setting the cost of short-term money loaned to banks, this interest rate lever has worked over the years to dampen inflationary pressures. As a result, the United States, despite its bloated debt and deficit spending, continues to be a country where, at least, there is a target of trying to keep inflation at or below 3% per year.

We are the envy of some third world countries whose inflation rates can reach 50% or even 100% a year.

I remember taking my first economics course in college. My Dad, who only had one-semester of college before needing to return home to run the farm, would quiz me regularly about what I was learning. But, in truth, I think he knew more about economics and, especially, inflation than I did. He experienced it every day in running the dairy farm.

So, to the reader who sent me the letter, here is my answer: I am still not an expert at knowing or understanding all that there is to know about inflation. However, my Dad was right – it is a curse that will always be with us, and the only way we can offset it is by the old-fashioned way of trying to increase our income, reduce our expenses, and then invest prudently to try to offset its effects.

Rolland Kidder is a Stow resident and a former New York state Assembly member.

 

Turning Swords Into Plowshares

These are words from the Old Testament–words of hope from a prophet that, at the end of time, “nation shall not lift up sword against nation, neither shall they learn war any more.”

Unfortunately, we haven’t gotten to that point, and mankind continues to find new ways to kill each other…of turning plowshares into swords.

It is sad, but true, that when new technologies have been developed, humans have found a way to turn them against each other. I would expect that back in the Bronze Age, spears were developed to hunt for meat or as protection against wild animals. However, it wasn’t long before they were being used in warfare between opposing tribes.

World War I is another example of how new technology was applied in war-making. Soon after the internal combustion engine was invented, nations found a way to mechanize warfare. By putting tracks and a gun on a steel reinforced platform, you could make a tank. Tanks were introduced to supplement the machine guns and artillery used in the trench lines and killing fields of eastern France during the conflict. (You will find cemeteries here with graves of thousands of Americans who died in that war.)

Perhaps the biggest “advance” in warfare at that time, was the introduction of the airplane. Balloons had been used during war, at least as far back as America’s Civil War. But, airplanes brought a whole new technology to fighting. Not only could planes fight each other, they could drop bombs from the sky behind the lines.

Recently, in Ukraine, we have seen the development of another new technology in fighting — drones. Drones, we thought, would be delivering packages to our homes. Now, they have been adapted for war. With a drone, you don’t need to endanger a pilot who could be shot down. Computers, GPS’s, and remote radio-control — guide drones that deliver bombs and destruction against the enemy.

This new, and somewhat strange way of fighting, will again change things in the world of warfare. It is apparent that ships are no longer safe. On several occasions, Ukrainian drones, both by air and sea, have sunk Russian warships. It now appears that Russia’s advantage in having a large Black Sea Fleet has been greatly compromised. Russia also has drones, many made in Iran, which have been used against Ukraine.

What does this mean for the future of warfare? Will an aircraft carrier carry drones instead of man-piloted aircraft? Will the aircraft carrier itself now become outmoded because of its vulnerability to drones? How do you defend against drones? Apparently, they can be shot down but also, many get through to their targets.

In the midst of this new development, old threats still prevail — especially, the threat of nuclear war. If there is one thing we know about human history, it has been a history of war.

All of this, to my mind, makes the work of our local native, Robert H. Jackson, even more relevant. At Nuremburg he led the way in establishing new definitions like “aggressive war” and “crimes against humanity.” In his words, as quoted in bronze at the Center carrying his name, an achievable goal should be to “root out of men’s thinking that all wars are legal,– [then] at last, we will have mobilized the forces of law on the side of peace.”

In the meantime, we need to keep yearning and hoping for those days promised by the prophet, when “swords will be turned into plowshares… and they shall learn war no more.”

Rolland Kidder is a Stow resident and a Vietnam War Navy veteran.