Family Economics: Understanding Inflation's Impact on the Family

Why does society need to have both the husband and the wife (both spouses/partners) working to be able to afford anything? To answer that we must go back and see what changes were made over time.

Before the industrial revolution when a couple set off to create a life for themselves, the husband would work to bring money and/or food into the household while the wife did all the work around the house. There were no washers, dryers or dishwashers. The wife would take care of all the “domestic” chores while trying to feed the kids and educate them. In towns, there would often be a woman (sometimes a man) who would run the schoolhouse for very little (if any) money.

After the industrial revolution there were inventions that would really help the women free up some of her time and allow a little enjoyment of life - washers, dryers, dishwashers, etc. (The first gas stove was invented in the 1820s and the first electric stove in the 1890s.)

Then the lack of banking and investment laws allowed people to borrow money to invest in an investment with nothing tangible backing it up. It grew until it reached a point where one person wanted to cash in and there was no real money to pay them. So, like a house of cards it collapsed. (Take a look at the stock market crash of 1929.)

The government tried to help by passing social programs that didn’t add anything to the GDP. Every time the government tried to reduce its spending, the economy slipped back into recession, so the economy limped along until WWII.

When Japan attacked Pearl Habor in 1941, the US declared war. The high demand for war products kicked the manufacturing economy into high gear, creating wealth and greatly expanding the economy.

When WWII was over, there was a huge manufacturing base that had been created and soldiers who came back from war had money to spend. The soldiers used the skills they had learned and took jobs in the civilian world, and the economy was firing on all cylinders. Japan had awoken the sleeping giant in more ways than one.

During the war the US had instituted a “temporary” income tax for workers to pay for the war. Well, as we all know, laws are rarely ever temporary. The income tax was bringing in a lot of money that the US government wanted to spend so that we would be prepared to respond if attacked. They wanted to make the US military so big no one would dare attack us. This poured gasoline on the economy and fueled it until 1972.

President Nixon was in office at the time and thought the economy was being strangled by the limited dollars available because of the U.S. currency being tied to the gold reserve the U.S. had acquired during WWI. Many Allied countries were starving for money to pay for their military, so they sold their gold to the US. Now Nixon thought if he untied the currency from the gold standard, the U.S. could create more money to grow the economy.

Then in 1974 Opec turned off the spicket to oil. Economies run on energy and by far the #1 energy source was crude oil. So much comes from crude oil that I can’t list it all but the lack of it just put the brakes on the economy and sent the US into a recession.

Then Jimmy Carter was elected president. He tried to do what FDR did in the 1930s, creating government benefit programs that needed the federal reserve to print money to fund.

What happens when you create more money chasing the same number of goods? You get inflation. Prices and interest rates skyrocketed. Unfortunately, this wasn’t inflation. It was stagflation - inflation without an increase in wages.

The increase in prices put a real strain on the single-income family home. Women had to go to work to make ends meet and help put food on the table.

In 1980 the people said this isn’t working and elected Reagan to bring some fiscal responsibility back to government spending. It took several years to stabilize the economy and finally get the inflation to start going down, but the damage was done. A couple firmly needed 2 incomes to survive.

The dot com bubble helped increases wages as the demand for a talented work force outstripped the supply, but this was temporary like the 1929 burst when the investment dollars ran out and 9/11 happened.

The economy puttered along until 2007 when the housing crisis bubble blew up. What caused this goes back to the 1990s. Then president Clinton appointed someone to run Fannie Mae and Freddie Mac who changed the policy of getting a housing loan to not having to put anything down on a home mortgage AND the 2 agencies would guarantee they would buy any mortgage made by a loaning institute. This was done to spur lower income families into buying a house. The problem is these people didn’t have the fiscal responsibility to save money to prove they could pay for them and when the economy started flat lining from the dot com bubble bursting they just walked away from their loans and left the banks holding millions of dollars worth of real estate they couldn’t sell.

Layoffs began, raises stopped, and replacement jobs didn’t pay what the old job paid. This further fueled both people working in a family.

Again, like in the 1920s, bad fiscal policies killed the economy and kept both parents working.

The economy started a slow recovery under Obama but now there were nowhere as many manufacturing jobs available to fuel a recovery. The manufacturing jobs had been outsourced to other countries. The United States had become a consumer, not a creator. Bad government policy set us up for an economy that barely grew. Obama said, “Get used to it”.

Then Trump came along. He was a job creator who had created and run several companies, and he knew the policies of the Obama administration were strangling the economy and preventing it from recovering. Like in 1980, the people said this isn’t working and voted for real change or more like change it back.

When Trump came into office, he immediately changed government policy to untie the economy. The next 3 years saw a growth we hadn’t seen since 1945. Businesses started running again and giving raises. Companies started hiring and were running out of skilled labor driving wages higher.

Then Covid hit and didn’t just put the brakes on the economy, it locked up the tires and skidded to a stop. The workforce shifted to a work at home workforce if you could work at all. The internet was fast enough that businesses were able to keep running with a remote work force using products like Skype/Teams and Zoom. People paid off debt out of fear of losing their jobs.

As the economy started recovering, people began to realize they could exist with mom working from home and in many cases not working at all. We had finally made it back to where we were before being taken off the gold standard in 1972.

But then bad government policy reared up again and created MASSIVE government spending programs that required the federal reserve to print money. This created what was essentially hyperinflation, but it was really hyper-stagflation. So back to work the women (and moms) had to go to make ends meet. Like the 1970s, the younger generation is really struggling in this economy to survive. They were at the beginning of their careers, so they weren’t making much money and the prices essentially doubled for everyday items in 3 years.

So, back to the original question, why do families need both spouses working to make a living and make ends meet? As you can see the real reason is bad government policy and government spending. And if you deep-dive into history something jumps out at you, it’s one party that causes most of it. If you vote for that party, you are voting for your own demise. It’s the Democrats.

What are your thoughts?

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#Inflation #WorkLifeBalance #Economics #Politics