A MAN and his wife stopped at a grocery store to buy just a few small items. The clerk took the $10 bill (U.S.) that the couple gave her in payment, but returned only 40 cents. The wife, expecting much more change, exclaimed: “Oh, Miss, you’ve given us the wrong change! We gave you a 10-dollar bill!” The clerk answered: “But that IS the right change! Those items now cost $9.60.”

The husband held the small bag of items in the palm of one hand, shook his head in disbelief and muttered: “What’s happening to prices anyway?”

If you shop on any regular basis, you well know what has happened to most prices: they have been on a relentless surge upward. True, prices have been rising for many years, especially since World War II. But never has the increase been so persistent and so much as it has recently.

Nor is the situation confined to just a few nations. The entire world, practically without exception, is plagued by this phenomenon, including even the tightly controlled economies of Communist lands. And this is unique, because never before have all nations undergone such inflation at the same time.

Of course, wealthier persons are not bothered much by most price increases. They can afford to pay more. But the overwhelming majority of people in the world are not wealthy, and many of them are suffering because of what is happening.

In country after country, polls show that people consider their greatest problem to be inflation. They feel as though they are in a trap that is closing in, with no way out. Many husbands work overtime, or on a second job. Many wives also work now; in some lands more than half of them do. Family life is affected, because one of the major reasons for family breakdowns is the fighting over money.

An American housewife lamented: “I wonder whether we’ll ever get ahead.” But while she was wondering about ‘getting ahead,’ others were wondering about survival. A truck driver in Brazil commented: “I’m getting panicky these days with the absurd cost of living. It seems as though there is no way out.” In that same land, not unusual is the situation of one husband who has two jobs, works 12 hours a day, six days a week. His wife teaches sewing and also works as a seamstress at home. They stated: “Caring for a family becomes increasingly difficult.” Indeed, one janitor in Brazil said: “We are not sure whether we are living or just existing.”

It should not be thought that this situation exists only in poorer countries. In the United States, an Atlanta woman works 40 hours a week as a hair stylist and then as a waitress on weekends. She says: “I’d starve to death if I didn’t hold down two jobs; there’s no way I could pay my rent.” Her situation, too, is not all that unusual.

In an African country, a report states that the following is happening due largely to runaway inflation: “More and more people turn to stealing, embezzlement, bribery and any other way they can get money to meet their daily needs.”

In highly industrialized Japan, in one period of about seven months nearly 100 people killed themselves because of troubles caused by sarakin (loan sharks). These people had gone deeply into debt, borrowed at high-interest rates, and could not pay the money back. Unable to face life, they committed suicide.

Historian Arthur M. Schlesinger, Jr., asserted regarding the economic situation: “The party’s over.” He said that the days of unparalleled prosperity in some places must now be changed for discipline, sacrifice and a lower standard of living.

In France, a commentator declared: “The dream of a ‘new society’ of abundance promised toward the end of the 1960’s and extolled during the early 1970’s has died out as inflation has made a lethal attack on the purchasing power in France.” Similarly, in the United States the Encyclopedia Americana Annual for 1979 observed: “The American dream, people said, had become a nightmare.”

Citicorp, a large bank in the United States, concluded: “The unpleasant fact is that the persistent inflation afflicting most countries will, if allowed to continue, ultimately have consequences that go far beyond what is narrowly defined as economic.”

Yes, unchecked inflation can mean much more than just a matter of some people having less. It can threaten the entire way of life of a nation. In fact, in the past it has destroyed the economies of nations. This time, inflation threatens the whole world, and not just economically, but with staggering political and social consequences as well.

Inflation Tightens Its Grip

“WE HAVE to recognize that we are at war . . . with inflation,” declared Business Week magazine. It added: “We are, moreover, losing that war.”

The “war” against inflation was being lost in the sense that, regardless of the measures taken so far, inflation has tightened its grip on the world’s economy.

As a result, there is a loss of confidence in money​—that is, paper money. This can be seen from the price of gold. Historically, gold has been the “money” of last resort, most valued in times of trouble. So it is a kind of “barometer” of economic conditions. Less than 10 years ago the price of gold was $35 (U.S.) an ounce. But in 1979 it went over $444 an ounce! This represents a large measure of lost confidence in paper money, and is an indication of how savage inflation has been.

All during the 19th century prices were relatively stable. But after World War I they became more erratic. Then, after World War II inflation became a part of everyday life. In recent years it has become more pronounced than ever, so that even during recessions inflation persists.

During one month in 1979 inflation in the United States registered 12 percent above the previous year, 15 percent in Japan, 18 percent in Britain and over 10 percent in France. The Federal Republic of Germany, with one of the more stable economies, experienced a 10-percent jump that month.

The Philippines reports that since 1966 the price of food, clothing and fuel has more than quadrupled. The price of Japan’s staple food, rice, increased over 500 percent in two decades. Brazil admitted that inflation in 1979 would be about 40 percent, as in 1978. There, the magazine Administracão e Servicos observed, “68 million Brazilians are not able even to think about buying a simple electric iron” because of having to spend their money for necessities.

Some African countries have inflation rates of over 100 percent for just one year. Israel’s rate was near that last year, and since its founding over 30 years ago the consumer price index there has risen over 5,000 percent!

The situation in the United States demonstrates what can happen over the years because of inflation. The dollar that was worth 100 cents in 1898 is now worth only 12 cents.

Workers whose wages just keep pace with inflation are being hurt two ways

However, have not wages also increased? Yes, they have. And for many workers wage increases have been greater than the inflation rate, so their standard of living has improved.

That is not the case with many other workers, though. In the United States, for example, about half of all workers find that inflation grows faster than their incomes, meaning a decline in their living standards.

Further, many poor people and persons on fixed incomes have fallen far behind. Note just one sample of this, a retired schoolteacher in New York city, who said:

“My present annual City pension is $4,439 [below the poverty level in the United States]. That we find it difficult to get along despite our heroic efforts at economy will, we are sure, not surprise you.

“We have no car. We do not own our own home. We rent the same small apartment we have lived in for more than 35 years. We take no vacations. We do not travel. We do not eat out. We consistently shop only [at] sales, and only for the most important necessities.

“We use no tobacco. We never indulge in liquor​—not even in an occasional beer. We have not been to the theater or even to a neighborhood motion picture since my retirement more than 21 years ago.

“We do not entertain. We spend no money on gifts to friends or relatives. We content ourselves with the occasional good will postcard for important occasions. We do not regularly buy a daily newspaper anymore.

“My wife and I are both in our mid-seventies. Neither of us is well or able to work.”

Workers whose wages just keep pace with inflation are also being hurt. Why? Because inflation’s bite cuts two ways. Not only do increasing prices reduce the value of hard-earned money, but corresponding wage increases put workers into higher tax brackets, exposing them to heavier tax burdens. The result is a net loss of purchasing power.

Also, inflation often penalizes thrifty persons who put money in savings banks. In one country, the interest paid by the banks was only about half the inflation rate. So at year’s end, the bank account, including interest, was worth less than at the start of the year. What made this worse was that the interest was taxable.

People carry heavier and heavier debt

The money squeeze has resulted in an enormous increase in personal debts of all kinds. One reason is that people do not want to try to save money before buying things they desire. So they go into debt to get them.

But another growing cause for this debt is that, due to inflation’s relentless surge, more people now borrow money just to maintain what they have. And the American Annual for 1979 also noted: “Those who once borrowed rarely, and only for big ticket items, sometimes found their borrowings paying for necessities instead.”

Then there are those who see no future ahead and so adopt the ‘eat, drink and be merry’ attitude, trying to enjoy all they can before it is too late. As one such person said: “I have a sort of doomsday-type attitude.” Some others even borrow heavily with no intention of paying back, which amounts to stealing.

U.S. News & World Report called the trend in debt “a tidal wave” that is “throwing a new scare into economists.” It also said: “Never before have people relied so much on borrowed money.” Any severe economic setback would bankrupt millions of these people.