Pay the Price

Pay Me Now

There’s an old athletic expression:  “You can pay me now, or you can pay me later”.  It simply means, either you put in the work to be “good” now, or you will pay the ultimate price in failure or injury later.  But that also applies to our Nation.  We dodged a huge economic bullet in the year of the worst pandemic crisis:  March 2020 to May of 2021.  Unemployment in the fall of 2020 was approaching 15%.  In many job categories, unemployment was much higher.  Before the pandemic struck, the rate was under 5%.  

That meant that many millions of Americans, through no fault of their own, were out of work.  They wouldn’t get a paycheck; for rent or mortgage, for food, for dental care for the kids.  And most Americans, like it or not, didn’t (and don’t) have the “four months” emergency fund that all of the personal finance “gurus” say should be in the bank.

In fact, there were even worries about the banks.  What if…everyone wanted whatever cash they had at the same time?  We faced shortages in meat, toilet paper, and all sorts of seemingly random items.  What if the banks too, were short of cash, short of the money many desperately needed to keep life going?

We faced a good old fashioned economic depression, one almost as big as the Great Depression.  The stock market lost almost half its value, and while prices for some goods fell (gas prices for example) the issue wasn’t the price, it was in getting money to buy those goods in the first place.

History Lesson

But we learned a lesson from the Great Depression.  The Government CAN take actions to shore up the economy, particularly in an economic crisis created by a non-economic disaster.  This wasn’t caused by a “Black Friday” on the stock exchange, nor a real estate or dot-com “bubble”.  It wasn’t even stock market high-jinks like the crash of 2008.   This was a massive unemployment event, caused by a pandemic.

So the Government intervened.  Trillions of dollars were spent, shoring up personal incomes.  Unemployment checks were boosted and extended, and most taxpayers were given direct aid, a $2000 “boost”, to help tide them through the crisis.  It wasn’t a “Republican” or “Democrat” thing (though President Trump’s signature was prominent on the letter attached to the check), it was a whole Government thing.  And it was the right economic move to make.  

In the worst days of the pandemic, there was lots to worry about.  Thousands of Americans, mostly the old and the vulnerable, were dying of Covid.  Many more were getting sick with a disease that had unknown short and long term consequences.  And we still don’t know what the health fallout from Covid will ultimately be.  But there weren’t bread lines, there weren’t runs on the banks, the stock market gradually recovered, and we muddled through the pandemic.

It wasn’t all pretty:  wear a mask or not, kids at home or at school, old friends disappeared, buried without fanfare or funeral.  But we managed to make it.  While we still haven’t mastered Covid, we’ve found a way to co-exist with it.  Now it’s shots versus variants, testing versus blithe ignorance, and what has become a steady death toll.  Still some 300 plus Americans still die of Covid, daily.  It’s just “what it is”.  

Economics 101

“Pay me now, or pay me later”.  The US Government pumped trillions of dollars into the economy, to try to stave off the looming Covid “depression”.  And it worked.  But economics is a game of balance.  It’s all about paper.

Paper money is worth exactly what it can buy.  There’s no intrinsic value to the paper itself, just rags and ink really with some high-tech gismos to try to prevent forgeries.  As we discovered in the pandemic, the value of goods, say toilet paper, is simply based on what people are willing to pay for it.  If there’s a scarcity of toilet paper, then the remaining amounts are worth more.  Why – because people want it, and they are willing to spend more for it.  They wanted it so badly they literally fought for it in the aisles of Krogers.

And if people have more to spend, they will buy more goods.  So if there is a greater supply of paper money in the nation, than ultimately people are going to “compete” for goods, by being spending more for them.  And the US Government, under both Republicans and Democrats and for good reason, put a lot of paper money in the economy in the past two years.  So, it stands to reason that the value of that money would go down.  

Pay Me Later

This is the “pay me later” of the Covid relief bills.  

So gas prices are at over five dollars.  And I paid $20 dollars for twelve rolls of paper towels (of course, if you read the packaging, 12 rolls equals 20 rolls, and the Brooklyn Bridge is for sale).  And I just noticed that not only did a Three Musketeers bar cost more, but it’s smaller than it was before.  So what’s going on?

We’ve all got more money.  Wages are going up.  Even the State Teacher Retirement System, as tight-wad a program as ever invented, granted a one-time cost of living increase.  And we all spent our Covid “government bonus”. 

Sure the oil companies are making “bank” on the gas prices.  The shipping companies are more than doubling their profits as they stack cargo up at the ports.  There are all sorts of ways individuals and companies are finding ways to “profit” from the current inflation.  But at the core of the problem isn’t “Democratic Socialism” or “Republican Incompetence”.  It’s simple:  we dodged an economic depression caused by Covid.  We did it by pumping money into the economy.  Now we have to pay the price.

Now, it’s later.