Repricing the Universe

Repricing the Universe

FIRST TRIP FILLER STORY IN CASE I DON’T KEEP UP

About 20 years ago a guy came on the scene in New York City, and he became a bit of a phenomenon. His name was Jimmy McMillan and he coined the expression the “The Rent is Too Damn High!”. He formed a political party with the same name and ran for the Mayor of New York City in 2005 and 2009 and then ran for both Governor and Senator in 2010. He got between 4,000 and 40,000 votes from people who either thought he was just too damn funny to ignore or genuinely felt that the rent was, indeed, too damn high. What most of us thought was that this was a funny proposition because there was no context with which to consider what Jimmy McMillan thought was rent that was too high. When I was in college, a friend of mine used to throw around a matchbook that had a very simple ad to attract people to call to apply for training as a long-haul trucker, a job classification that has always had a hard time attracting employees because the work is so hard and tedious and the lifestyle so difficult. The matchbook tried to lure applicants by stating boldly, “Earn Twice the Money!” The profound humor my friend found in that was that anyone would take that claim seriously given that there is no context and who the hell knows how much money anyone else makes such that they could seriously claim that they offered people the chance to double their income without knowing where anyone was starting from.

These days, we are working our way through a critical and turbulent election year with two very old prior presidents vying for position like bicyclists is a velodrome where position and timing are the critical determinants of crossing the finish line first and going slow to get just the right placement to draft at the right moment so you can surge forward across the finish line is the secret to success. As with all elections, the most critical factor is the state of the economy. As James Carville, the Democratic pundit, stated in 1992, “It’s the economy, stupid!” It’s always been the economy (Except once in a while when its the war, stupid), and may always be. Since 2008-2010, when the world financial system gagged on its own excesses and we spiraled into The Great Recession, our American economy had the most prolonged period of economic expansion ever recorded and it ended, not because of some economic circuit breaker tripping, but because of the COVID-19 Pandemic of 2020-2022. Many of us thought that the Pandemic would trash so much of the global economy that complete restructuring would be necessary and painful. That didn’t really happen and the economy seemed to muscle through the Pandemic in surprising ways, helped significantly by extreme fiscal intervention (both in America and other OECD nations). As Joe BIden took office in early 2021, the economy, as measured in proxy by the stock market was actually already well above the pre-Pandemic highs. But at ground level, Biden felt the pain of the American citizenry and the crying need for stimulus and infrastructure investment, so he pushed and got passed three stimulus bills, one called the Inflation Reduction Act to address the inflation concerns that were raging (at the time, heavily embodied in gasoline prices that effect almost all Americans and their all-important transportation imperatives). Since that bill passed in mid-2022, Republicans have both decried it as “mortgaging our future by boosting National Debt” and then adopting it as their own as their constituents began to benefit from the investments.

Now that inflation is coming under control and the markets are booming to new all-time highs and unemployment numbers have been below 4% for two years (something that hasn’t happened since the 1960s) and Biden is able to say that he has created more jobs than any other president in a similar timeframe…by a lot, Republicans and people who just can’t get their head around the thought of a Democrat, especially Joe Biden, the old stuttering career politician, are forced to find another measure to complain about. That measure seems to be the cost of groceries and services. Those have, indeed, risen by some 25% over the past four years (that being a better match with COVID than the three years of the Biden presidency), but economists have produced lots of empirical evidence that those price rises are mostly caused by supply chain issues, war-related disruptions in Ukraine and now Gaza, and plenty of corporate price gouging (corporate profit margins and levels being the best indicator of that). But none of that is stopping from people saying, “Grocery Prices Are Too Damn High!”

Look, I don’t like higher prices any more than anyone does. I’m a retired guy who spends a lot of time shaking my head to myself when I realize what things cost…all sorts of things, not just groceries. But I am too much a student of economics to bitch about that because it falls into the category of things I cannot change. None of us can. We can see some commodities or even services come down in price. We all know that tech goods trend downward while becoming more and more impactful (like computers of flat-screen TVs). In 1945 when the ballpoint pen was introduced it cost $12.50 ($70 on an inflation-adjusted basis) and yet today, they are mostly give-away items or $0.15 apiece if you buy BIC pens at Walmart. But for the most part, prices simply do not go down and the cost of living just keeps marching upward, just like the stock market does. The exception with that is what happens during an economic time which none of us enjoy, like a depression. Not a recession, a depression, when deflation replaces inflation. During the last fifty years of my working life, the scariest moments were those when we thought we might be heading into a deflationary environment. Inflation is something we have all learned to live with even though we want it to be low and under control, but none of us know how to drape with deflation. It’s scary.

So, I feel that this political cycle of 2024 is moving into the theater of the absurd in many ways. The Republicans in the House of Representatives are doing things that are bizarre. The judicial system is being put on its head (including the Supreme Court) by a man who everyone knows is crass, crude and unethical, and yet who commands a significant following in the country and is keeping the entirety of Congress and the Judiciary (two thirds of our governance checks and balances) in disarray. Inflation was just reported to be down to 2.4%. Good on us! And on the economic front, the Big Kahuna of the campaign trail, the news is so good for Bidenomics that the only hook that conservatives can hang their hat is to try to suggest that we need a repricing of the universe because Grocery Prices Are Too Damn High!