Historical Articles of Solano County

Friday, October 26, 1979

Inflation Poses Problem for Vaca Retirees

John Rico

MAYBE, PERHAPS, IF, AND BUT - I don’t know how much confidence you can place in learned economists, but nevertheless, some of their utterances make good food for conversation.  As a guest of Obie Ladd and his Heart Federal Savings, I had an opportunity to listen to remarks by noted economist, Ezra Solomon, who hangs out at Stanford University, He addressed a large group at the St. Francis Hotel in San Francisco.

Reading between the lines, I could clearly see that Solomon had no love for President Jimmy, but it was surprising when he concurred with the latest actions of the Federal Reserve Board in boosting interest rates and demanding that larger reserves be kept by lending institutions.

If an economist tells you what you want to hear, he becomes an expert. Contrary expressions would place such an economist in the category of a “bum.”

Having lived through the cycle of the low economic condition of the world in early 1930, to §he inflationary spiral of the present, I was more or less in agreement with what Solomon had to say and predict.

More than once, I have written in this column that the prime benefactor of inflation is an over-abundance of money in circulation. That is just what Solomon said, too, so you can see that although I do not hang out at Stanford University, Solomon and I are of the same school of thought.

I have always predicted that the nation and the world would never see a recession, turning into a depression duplicating the one following the stock market crash of late 1929. That’s exactly what Solomon also said.

The speaker did predict a mild increase in unemployment; a moderate slow-down in home construction; and the possibility of a tax break perhaps sometime in 1980. It was his prediction that our balance of payments, exports vs. imports, would continue into the red for the United States, mainly because of our multi-billion dollar oil buying spree.

Although he did not use these exact words, Solomon revealed that our laborers are becoming less proficient. He predicted a continuing spiral of women into the work force.

When asked about the price of gold and its ultimate high point, he shrugged off the subject rather politely, saying he would not venture a guess as to how high gold would go on foreign exchanges, and he seemed rather unperturbed with the action of gold as it relates to our future economic conditions. He did say that gold values are being, manipulated, and there is every possibility the precious metal could go down as fast as it has increased in the past few years.

So, here are five interpretations of just what Solomon had to say:

(1) There is going to be a mild recession, which is already under way;

(2) Home building will decline moderately, but the heavy influx of new residents to the sunshine state is going to keep demands heavy;

(3) We need alternate sources of energy. We are captives of the OPEC nations and our money is going to end up in the hands of foreign governments;

(4) The best adrenalin for the economy would be for Carter to quit;

(5) Do not confuse a recession with a depression. The United States is in an enviable position throughout the world and we are going to remain there.

Government is too big, we are stumbling over edicts which resemble two-headed monsters.

There are on an average, 175,000 people pouring into California every year. These newcomers demand commodities and services; they need housing, jobs. There is no way to tell these newcomers to pack up, bag and baggage and return to their former homes. They are coming to California, to Vacaville and Fairfield.

We compound our problems by artificially creating shortages, which in turn adds to our inflationary spiral. A shortage of housing reflects in the continuing price increases; idle time brings about the urge to be on the move and this consumes gasoline which we buy overseas; two paychecks for many families have ushered in a more bountiful way of life.

Inflation strikes a bit bolder in a community such as Vacaville, with its preponderance of retirees. These residents find themselves on fixed incomes, yet they are trapped in the vicious cycle of inflation which gnaws away at their spendable cash.

Unfortunately there is a segment of our population which rides on the coat-tails of inflation and practices negativism to the detriment of the masses.

We will continue to need revitalized cities; we need a progressive attitude in highway construction; a broader understanding of our needs for educational facilities; for taking care of a sewage disposal needs; providing energy producing facilities. In plain common sense: we need to keep on moving.

All over the world people are concerned with: “America is going to hell, but brother how we would like to live there.”

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