Posted by Brian at 12:02 AM
Guest Blogger Amy
She wrote this earlier, and I thought I'd get it a bit more circulation--it's something we've been talking about a good bit lately.
WHAT DOES INFLATION LOOK LIKE...?
In a globalized economy?
Several years ago, when I realized what an enormous amount of student loan debt I was acquiring, I started joking that my only hope was if the economy crashed and out-of-control inflation made my total debt equal to a week's pay.
More recently, I graduated, and I got all those fun-fun letters from the consolidators and debt-holders, managed to manoeuver my various loans into one big loan, and find out (SURVEY SAYS...) how much money I'm in for. The result? Almost 100k.
Talk about sticker-shock! THAT'S A HOUSE! was my first thought: that I'd actually acquired so much debt that I might as well have a mortgage! Eventually I became happier with this metaphor. I figured, yeah, some people have houses, but I've got an education, and I'm cool with that. I like my education, damn it, a lot.
When we moved home to Florida, though, and got half-absorbed into the house-buying frenzy that was late-Spring early-Summer down here (since, I think, become a thing of the past), I started seeing house prices that were out-of-control. Houses with major damage and problems in boring neighborhoods going for 400k. Simple little cottages downtown for 600k. Even nasty little rat-infested sinkholes fer houses going for 250k!
That's when I realized, my student loan debt had gone from being a mortgage to being a quarter of a mortgage. Is this what inflation looks like in a corporatized, globalized economy? Sure, the price of milk increases only slightly, but it has decreased in quality. Sure the price of furniture seems about the same, but the workers in North Carolina no longer get raises or benefits. Sure this mall-bought clothing is cheap as its ever been, but China's low-low wages (think, prison labor) help with that.
The price of gas is getting ridiculous and the price of housing is out of reach for most people. (Almost no homeowner in Broward County could possibly afford to buy his own home!) Yet these prices seem "CHEAP" to overseas investors (who have been the ones stoking the SoFla housing fire) because dollars have become so very, very cheap.
Is this what inflation looks like in a globalized economy? I'm asking you, my dears, I do not know.
It's sad when you start thinking that in order to own a home, the economy is going to have to crash, because the people who will get hurt in that crash aren't the ones living on the Intercoastal in their 20,000 sq. ft. houses--it'll be the people who busted their asses, scrimped, saved, and got into the market just recently, but had to take an adjustable rate mortgage to do it, because when their rates go up, they're screwed. And yet, if we ever want to be homeowners--and we're talking about a small place here--that's essentially what has to happen, that or we win the lottery, and if home prices keep going up, it'll have to be a big lottery win, not a piddling couple million, because after taxes, you know...