Inflation will probably be the biggest issue in the 1978 elections, just as deflation, or tight money, was the issue in 1932 that elected Franklin D. Roosevelt for what ultimately became four terms.
Inflation hits hardest at those on fixed incomes who are usually our senior citizens. Because of the big drop in our birth rates, senior citizens are fast becoming our largest class of voters.
Candidates for public office in 1978 will be expected to have a plan to stop inflation. The socialist plan in Great Britain calls for government ownership as the solution to all economic problems.
British Socialist George Bernard Shaw used to point to the postal system as an example of successful socialism. There are few today who would cite our government-owned postal system or Amtrak Railroad as models for the way other businesses should be managed.
Everyone is tiptoeing around the shocking decline in the value of our dollar. The silence from the White House, from the Secretary of the Treasury, and from the Federal Reserve System is ominous. The dollar is at an all-time low when measured against the Swiss franc and the German mark. It has been steadily dropping for about four months. Meanwhile, gold has been just as steadily advancing.
Unlike the Swiss franc, our dollar is not backed by gold or by anything else. Inflating the dollar has been very easy since President Franklin Roosevelt took us off the gold standard.
It is beginning to look as though we will have to have another devaluation, with its cruel losses to those on fixed dollar incomes, such as from Social Security, retirement pensions, government bonds, annuities, or life insurance.
The present decline of the dollar and its coming devaluation are a particularly bitter loss to the millions of people who believed our government officials when they advised them to buy U.S. Government savings bonds.
It is strange that the men running our country show so little concern for the value of the dollar. They have voted for enormous deficits that can be paid only by printing more dollars or more government bonds, and thereby continuing to lower the value of our money.
Congress has just passed another large annual foreign aid bill of more than $6 billion. Once again we are giving our money, which we really haven’t got and therefore must print, to more than one hundred foreign nations.
Most people don’t realize what is going on and how their life savings are being eaten out from under them. They wrongfully blame the farmers, or business, or labor unions for the higher and higher prices. It is not really that prices are going up; it is that the dollar is going down. Increased wages don’t buy any more than the previous wages did, and on top of that loss is the extra tax bite we suffer by moving into a higher income tax bracket.
In the last ten years the purchasing power of the American dollar has fallen 45 percent compared with the Swiss franc, 43 percent compared with the West German mark, 27 percent compared with the Japanese yen, and about the same compared with the Republic of China (Taiwan) dollar.
Devaluation, like inflation, falls most heavily on our large middle class. Yet our government officials in Washington appear to be doing nothing to stop the rapid decline in the value of our dollar, and its impending devaluation. When devaluation comes, it is to be hoped that our citizens do not blame the wrong people.
