Best Columns: Inflated problems, Problems pricing
Painful inflation has
U.S. inflation isn’t just a U.S. problem
Painful inflation has “come home to roost” in the U.S., says Tim W. Ferguson in Forbes, where the Federal Reserve woefully “unleashed this unhappy interruption” of two decades of stable prices to “bail out” credit-parched bankers. But a “hypercompetitive” U.S. economy should contain the “inflationary breakout” in America. To the world’s misfortune, the pain will be felt more abroad, most significantly in Asia. To survive, Asian nations will have to cut food and fuel subsidies, which could cause unrest. And “the ultimate, unfortunate ramification of the Fed’s and Wall Street’s binge” would be “if the hangover brings the demise of pro-trade, pro-market globalizers.”
What price . . . anything?
Our brains are poorly equipped to “judge the value of the things we buy,” says Michael S. Rosenwald in The Washington Post. To cope, we “look for easy comparisons to give us answers.” That makes us vulnerable to “pricing tricks.” Take the new iPhone—we think of it as an expensive mobile phone, because its original price was $600, so when it drops to $200, we “get a psychological return of $400.” Except the savings are negated by higher monthly fees. Similarly, stock splits make shares seem more affordable, and $50 entrees on a dinner menu make the $30 chicken plate seem cheap. It can work in reverse, too: if your gas “reference point” is $2 a gallon, $4 gas makes the bus awfully attractive.
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