So, kids, pull up a chair on the porch. Yeah,no, that chair is fine, I’m still repainting and varnishing it. You’ve been hearing about inflation, which we haven’t had to deal with for a while. At least since the last time a Republican president was driving up the the United States budget by borrowing insane amounts of money to fund military spending.
Now, you know your Nana Sophie is old. Like, really old. Alive in the 1970s old. Back in the 1970s, inflation was going up because those pesky OPEC countries had decided to get together and raise prices on oil. Higher oil prices led to higher prices for other goods. So it was actually a little bit similar to a situation we are experiencing now. Expect kind of different. A different war, whatever.
When the price of consumer goods go up, that can be for many reasons. One might be that the economy is doing really well, and consumers have confidence in the economy, so they spend more, businesses do better, there is more demand for goods, and wages for workers go up. This is usually good inflation. Sometimes prices go up because nasty monopolies and rich billionaires pretend that they are being hurt by oil shortages so they can raise prices and buy more penis shaped rockets. Follow Elizabeth Warren and the US Agency for Antitrust on twitter or elsewhere to see what can be done about those price-gouging United States oligarchs. (Yes, we actually have an actual department that prosecutes anti-trust regulations that have been on the books for over a hundred years. Amazing. I see them on twitter so it must be true.)
Right now, you will see a lot about prices going up and inflation because we are boycotting oil from Russia and Russian oil companies so Russia will get their imperialistic grubby hands off Ukraine. New century, Russia. Stop weeping over your Faberge eggs.
When inflation goes up, the United States Federal Reserve responds by raising interest rates, hypothetically to slow down the economy and to make buying things more costly, thus reducing demand and increasing supply again.
In a different case, where the US government has been borrowing heavily, there is a shortage of dollars, which means that mainstreet banks will increase their interest rates on savings accounts and on Certificates of Deposits (a kind of savings where they pay you higher rates of interest if you agree to let them have your money for six months, one year, or two years and not ask for it back right away).
Banks will raise interest rates in savings accounts because there is a greater demand for dollar currencies which they need to lend to borrowers.
When Nana Sophie was a teenager in the 1970s, interest rates were high, and she saved enough money from babysitting and a newspaper delivery route and started putting her money in Certificates of Deposit to save for college. By the time Nana Sophie was 16 in 1980, she had saved $5000 dollars for college (you can prorate that for its value in money in 2022 dollars). Nana Sophie mentions this because in the last four years, people have been accusing Nana Sophie of not being good with money and not understanding the economy. Nana Sophie would just like to remind some people of July 14th, 2016.
Anyway, some people may tell you not to put your money in savings because the interest in savings won’t keep up with inflation. This is sort of true. Basically, if you leave money in the bank, with high rates of inflation, as the price of goods go up, your money loses value and every dollar purchases less then if you spent it on goods you could sell later. However, the advantage of the old-fashioned main-street bank is that the money in bank is insured. (Remember the Great Depression, Bank Failures, FDR, the New Deal?? Ring any bells? No? Okaaayy… Wow, it has been a long time since the world economy nearly crashed in 2008).
Anyway, after the stock market crash in 1929, in the 1930s, a bunch of big government New Deal Democrats created insurance for the money you put in the bank. If you put your money in a Certificate of Deposit, you should get a higher rate of interest, and that money is insured. The goods you buy to resell may not be as safe. Unless you know my friend Ricky and his special storage unit. But that is another story.
Anyway, Nana Sophie is on twitter at @CynthiaMN5 where she rambles just as much as she did in this diary. Right now, she is going to have a drink, and think about wheat.
Oh, just so you know, Nana Sophie has had a really tough six years. She not as nice as she used to be. She has her own homemade flamethrower and has been having fun over on twitter where she can just block people. She likes Norwegian trolls. Squishes the other kind.
Also, because Nana Sophie is an old people, she couldn’t see how to preview the diary, so she proofread as well as she could. Editing errors might hers, or might the fault of the Alphabet and Punctuation Thieves.