I usually find old newsreel movies to be interesting and/or entertaining. They offer a unique insight into how people at the time viewed the world, or at least how the powers-that-be wanted them to view the world. Often, they’re also corny, whether unintentionally or by design.
(via Zero Hedge) Here’s a 1933 film on how inflation can help lift the nation out of the Great Depression. At the time (as you can see in the nifty graphs) deflation was a millstone around the economy’s neck. With prices falling, people had less of an incentive to make purchases immediately, so they hoarded instead of spent. And so the vicious cycle continued. Inflation was viewed as a means of getting money flowing again.
Watch:
Today we see some economic parallels to 1930s deflation. Since the housing bubble burst, we’ve had significant monetary and credit contraction. Core CPI growth has remained below the Fed’s target rate for price stability. People are saving rather than making the discretionary purchases that they used to make. It’s a tough funk to get out of when you have a lot of extra productive capacity.
So we could use more inflation, and the federal government and the Fed have certainly adopted spending and monetary policies to promote it. The problem is–black and white propaganda film not withstanding–it’s not something that policy makers can easily switch on or off whenever they desire. If it was, we won’t have gotten in this mess to begin with. It’s more like trying to turn around an aircraft carrier in a pond. They may or may not be able to turn the ship in the right direction. And, even if they do, they might not be able to keep it from running aground.
If only solutions were as easy as the newsreels made them out to be.