Rediscovering the positives of inflation

Commentator David Frum.

TEXT OF COMMENTARY

Bill Radke: As we heard earlier in the show, President Obama wants to double U.S. exports. He says export jobs are one way we can sail out of our economic doldrums.

Our conservative commentator David Frum sees another partial way out of our troubles. He's just not sure the Republican Party wants to hear it.


David Frum: The June jobs numbers were dreadful, down 125,000. Maybe it's just a blip; the end of the census sent a lot of workers home.

But there are other signs that the jobs numbers will continue bad over the next while: Consumer confidence plunged in June, after three months of rising optimism. Job creation in the private sector was only one-third its April level. Conditions in the housing market continue grim.

The Obama administration is fretting over what to do next. More aid to states? Some kind of second stimulus? Or just hang on and hope for the best?

My own Republican Party is equally perplexed. It opposes more government spending. It wants the Bush tax cuts extended. But the Bush tax cuts are in place now -- and they do not seem to have helped very much through these terrible two years.

I have a suggestion. I think we should overcome our inhibitions and rediscover the positive side of inflation. I know! I know! I'm a child of the 1970s too! I remember when menus came with little stickers affixed in a stack atop the original price. I remember crazed auction rooms where bidders scrambled to buy something, anything with their depreciating currency: paintings, suits of armor, Austro-Hungarian postage stamps.

But as awful as double-digit inflation was, single-digit deflation is worse. As triumphant as the victory over inflation was, we can't always be re-fighting the last war.

This is a country deeply in debt. Inflation reduces the burden of debt -- anonymously, impersonally, and across the board. I hope I don't sound too nationalistic when I note that a lot of that debt is held by our Chinese friends. They ran huge trade surpluses with the United States when times were good. Time now for them to contribute a little back.

Nobody wants to see wheelbarrows of money at the grocery store. But 3 percent inflation? Four percent? There are worse things.

Radke: Commentator David Frum is the editor of FrumForum. I imagine you remember inflation -- How would you feel about a return? We'd like your comments -- about inflation or anything else you hear on the program.

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