Reason magazine’s Jacob Sullum explains economic science as presented by the NYT and the mainstream media here.
Rising prices are bad, and so are falling prices. As
recently as mid-August, we were worried about runaway inflation. In an
article headlined “Higher Costs Are Taking a Toll on Business,” The New York Times reported
that “rising prices have seeped into much of the economy, led by higher
costs for food and energy.” At the end of last month, under the
headline “Fear of Deflation Lurks As Global Demand Drops,” the Times warned
that reduced consumer demand could lead to “persistently falling
prices,” “suffocating fresh investment and worsening joblessness for
months or even years.”
Rising home prices are bad, and so are falling home prices. As home prices rose through 2006, newspapers across the country ran stories bemoaning
the lack of “affordable housing.” Now that prices are falling,
newspapers across the country are running stories about the disaster of
negative equity, the loss of what used to be a reliable investment, and the financial havoc caused by the assumption that home values would keep climbing forever.Rising oil prices are bad, and so are falling oil prices. Last
summer, with crude oil going for more than $140 a barrel and gasoline
over $4 a gallon, politicians were falling all over each other to do
something about rising oil prices, which made food and a wide range of
other products more expensive. Now oil is around $60 a barrel, but instead of celebrating we’re supposed to worry, because the price reflects fears of a prolonged worldwide recession.Consumer spending is bad, except when it’s good. Until recently, economists bemoaned
the nation’s low saving rate, warning that Americans were living beyond
their means, enjoying a spending spree subsidized by foreign capital.
Now the problem is that Americans are spending too little, saving or paying down debt instead of buying stuff they don’t need and thereby stimulating the economy.
