Looking forward to whew-flation
By Chuck Doud
The Madera Tribune
Some people — heck, a lot of people — believe we are in a recession, and maybe we are. But it still remains a fact that by the traditional measures we are in a slowdown, not a recession.
What we may be in, however, is a suck-flation. That is a time when money is being sucked from one part of the economy to another, usually to the detriment of the little guy or gal.
A good example of this is the price of gasoline. Those of us who buy gasoline are seeing our money sucked into the gas pump by higher prices, money we once would have used to pay the occasional restaurant or bar tab, money that we might have used for a new pair of pants.
In his advertisements on the subjects, billionaire T. Boone Pickens calls it the greatest transfer of wealth in history — sending $500 billion a year to foreigners who sell us oil.
That is a lot of money, almost what Congress wastes a year. (Actually, I’m overstating. Congress probably doesn’t waste more than $200 billion in an average year.)
Everything we use has a gasoline component — the amount of gasoline that was used to the item, be it food, clothing or a component of something else to where we can buy it.
Suck-flation is a bit like inflation, but with inflation, most of the money from rising prices stays in the economy. Because we import so much of our oil, that is not true with suck-flation. With suck-flation, that money goes away and we hardly see any of it ever again.
We know this will kill our economy if it keeps up. But we also know that in the past, when oil prices have risen, they also fall, sometimes quickly.
When that happens, we might get whew-flation, characterized by a big sense of relief.
