Inflation Expectations and Deflation Invocations

While Ben Bernanke, Chairman of the Federal Reserve, is worried about Inflation Expectations, I am just as intrigued by Deflation Invocations.

Recently a prominent TV news channel featured a church group that congregated near a gas station and prayed for cheaper gas. My first reaction was amusement but then I realized that this represented a historic first. Till now the faithful had always asked for miracles or a handout from God but this time they did not pray for a freebie. Instead, these people were being very reasonable; all they wanted was a "good ole American Discount". However they were somewhat vague, they did not specify how much discount they wanted, 10%, 20% or a clearance type sale with 75% off.

In any case, their prayers for a discount went unanswered or should we say were "discounted" by the Supreme Being. The prices for oil and gasoline continued to march higher. Perhaps they had asked for an Early Bird Discount but went too late. They certainly could not qualify for a Senior Citizen Discount as there were old as well as young people in the group. However I noticed that they had not brought their cars to the gas station and attribute their failure to a lack of conviction.

A few years ago, in a small Southern town suffering from a severe drought, the citizens had gathered at the local church to pray for rain. The Pastor rose up and with a stern look admonished his flock, "Ladies and Gentlemen, you have come here to pray for rain. There is only one question I have to ask you. Where is your umbrellas?" It seems the Church group praying for cheap gasoline had the same lack of conviction; they all walked to the gas station instead of bringing their cars for a cheap fill up.

There could be another and more ominous reason for their lack of success. The Sultans of the Middle East may have been "counter-praying" for more expensive oil, which would create a dilemma for the Supreme. Their worshippers may be praying longer hours than us, after all, there is not much else you can do in the middle of the desert. If more of our countrymen join in praying for cheaper energy, we might meet with some success. However, we should then be prepared for a military attack from the Arab countries on the pretext that we were using WMD's (Weapons of Mass Deflation).

However, Gasoline is not the only commodity exhibiting inflation. Most meats, vegetables, bread and milk have nearly doubled in price in just the last 3 years. We could safely pray for a discount in these commodities, unlike oil, without risking a world war. However, we need to first resolve some issues. Firstly, where should we go to pray? For cheaper gas people went to the gas station; by the same token we should go to the dairy for cheaper milk, to the slaughterhouse for cheaper meat and to the farms for cheaper vegetables. Going to all these places would take up a lot of our time, to say nothing of gasoline use. Would it not be just as effective if we prayed at the local Supermarket instead? Secondly, do we need to wear formal suits or can we pray in our jeans and casuals? Resolving these issues calls for a Federally Subsidized Study, to be conducted by the best minds from Ivy League schools or by some highly paid D.C. consultants.

Ultimately, if we all pray hard enough, the prices for all essential foods and energy might actually come down. We can then again afford to eat as much as we want and drive as much as we desire. With prosperity and abundance, our lives will presumably be full of health and happiness, but is that a correct assumption?

In the last five years, since cell phones and service became affordable, folks have become addicted to them, using them even while driving or walking on the roads. As a result, many motorists are not mindful of pedestrians. Worse, and more dangerous, many pedestrians are not mindful of the traffic around them.

Just recently, the roads have become less congested. If gasoline became very affordable, traffic jams would once again become the norm and parking would become more difficult at the malls. The roads would once again be populated with several SUV's and Hummers driven (in many cases) by inconsiderate drivers. Motorists would be driving longer distances and creating more pollution.

Very cheap food might create its own problems. Obesity and associated diseases like heart attacks and diabetes would certainly increase. As the bottom line in food bills became smaller, the consumer's bottom measurement would increase. This has been observed in emerging Asian countries, where the recent economic boom (now abating) led to a rapid increase in obesity, diabetes and heart problems, to say nothing of alcoholism, drug abuse and lax moral behavior.

It seems that some deprivation imposes a healthy, albeit involuntary and Spartan discipline on the citizenry. In that sense, a touch of inflation may not be so bad after all. Abundance and prosperity are really opportunities to improve our lives OR to ruin them, witness all the troubled celebrities that end up with shattered lives, suicides or in rehab. It may be fine to pray for deflation, but let us also pray for the discrimination and self control which are essential for responsible handling of the wished for prosperity.