- Well, you know, the definition

of inflation is too muchmoney chasing too few goods.

So something is not connecting.

Our CBN news financial editorDrew Parkhill is with us.

Drew, the governmentreport said 4% inflation,

but is it worse thanthat in the real world?

- Pat, I've been talking topeople and just things myself

seeing all kinds of anecdotal examples.

I picked up just picked up a magazine

that used to be $5 like a month ago.

Now it's $7.

I'm going to assume

that's because the price ofwood has gone up to make paper.

Pat, I was talking to one of the producers

on "The 700 Club" Friday.

She and her husband had been looking

at adding a deck to their house.

It normally would cost $3,000.

Now it's $10,000.

The price of lumber hasgone through the roof

and it's hard to make new houses now,

because there are shortages of things

like appliances and all kinds of things,

not only just wood.

So we're seeing all, I mean, even

in junk food in ourcanteen right here at CBN

which is not all junk food,

but I mean the prices there have gone up.

Snacks used to be 85cents are now a dollar,

sodas and whatever that were75 cents are now a dollar.

So that's a 25%, put those two together,

increase just like that.

I talked to people

before I came on today saying,

are you seeing inflation they're seeing?

Absolutely.

Some of it is because of bottlenecks, Pat,

because not everything isreopening at the same pace.

So there are shortages of some things.

And another big thing

is that the government is payingso many people not to work.

And this has become a big debate

in economic and political circles.

But I've seen estimates thatsay that economists believe

that 25 to 50% of theunemployment rate is from people.

They wouldn't make as muchmoney if they went back to work.

So that means fewer workersthat could drive up wages.

There's a lot of factors going into it,

but we are definitelyseeing inflation right now.

- Do you remember back to the seventies?

There was a spike in inflation

where it was just running out of control

and suddenly somebodyhad to put the brakes on,

and they did, but it was areal shock to the economy.

Are we looking at areturn to the seventies?

- Right now, I don't think so.

Because we had very certaincircumstances back then

that we don't have now.

But I want to show you somethingnobody ever talks about.

I don't know why, butI'm a numbers geek, Pat.

And I like to study the realworld as opposed to theories.

So I want to show you some numbers

of what inflation looked like.

There it is in the early 1960s,

from 1960 to 65

these are the official government figures.

Inflation was running right around 1%.

It picked up a little bit in65, but was still under two.

Now look at 1966, bam.

Almost overnight it practically doubled.

And it went way up.

By 1969, it was a little over 6%.

Remember, just a few yearsearlier, it had been 1%.

Now let's skip into 1973,

where it was 8.7%

in 1974 was 12%.

And that's when we also hadthat terrible recession in 1974,

where unemployment was 9%,

which economic theorysaid could not happen,

but it did happen.

Then it dropped back off again.

And then Pat, we come to 1978 to 1982.

Look how high inflation got.

That's just what you were talking about.

Jimmy Carter appointed Paul Volcker

to head the Federal Reserve.

When Reagan came into office,inflation had been raging two

back-to-back double years.

Paul Volcker said, I'm goingto raise interest rates

through the roof and Reagan backed him.

And it wrenched inflation on the economy

that we paid a terrible price.

My point is though, Pat, ittook years to build up to that.

This looks like more ofa short-term situation.

But part of the reasoninflation got so bad

in the 1970s Pat,

was that Arthur Burns, thechairman of the Federal Reserve,

kept interest rates toolow before things got,

and then things got out of hand.

- Drew Parkhill, thank you very much.

And ladies and gentlemen,

what was it said, the lessons of history,

those who do not learn

from the lessons aredoomed to live them again?