We have hit the misery index wall
Obama’s State of Union address was correct: the country has had four years of economic growth, with corporate profits and higher stock prices.
What’s perplexing is Obama challenging Congress for solutions to the dilemma that average wages have barely budged, that economic inequality has deepened, and upward mobility has stalled. Those problems are systemic to his economic policies, not problematic.
The fact is, the US economy is stalled with Stagflation. This outcome was inevitable the day Treasury Secretary Geithner devalued the dollar to junk status. Coupled with Fed Chairman Bernanke’s obsession of a Keynesian spending policy, the only result that occurs is inflation and high unemployment. Stagflation, the “Misery Index,” has returned.
Obama’s bet was that by devaluing the dollar, companies would use fictitious exchange rates to globally export airplanes, equipment, and automobiles. The payoff for a winning gamble would be increased demand for product that would provide new jobs and higher wages. Obama then doubled down on his economic bet with Keynesian Economic Theory that claims that shovel-ready infrastructure projects stimulate the economy.
Repeating demands for more spending and raises on minimum wage will not stop Stagflation, those demands only exacerbate the problem. The lesson that should have been learned from watching Japan languish from 20 years of Stagflation is to refocus the economy on inflationary costs that affect the household budget.
Energy costs are way too high. Health care costs are way too high. Food costs are way too high. Too much money is spent for gasoline, doctors, prescription drugs and groceries.
Without a policy change, your misery index will continue to climb. How high, who knows, but ask yourself this: If any day of late after arising you considered what corner you were going to cut to make ends meet rather than having thoughts of what way you were going to make money that day, then your misery index has hit the wall.
Walter K. Krauth III