 It would be highly desirable if families realized as clearly the results to be anticipated from a sudden and extensive shift in the general price level as they do the effects of an epidemic, or a flood, fire, or tornado. Civilized man has toward economic phenomena practically the same attitude that primitive man had toward natural phenomena. He cries out if he is hurt, looks for a personal agent who is afflicting him or his class, but does not understand the nature of what is happening and does not systematically do anything to control it.  The results of a rapidly changing price level are summarized in every elementary text in economics. In times of rising prices all those with fixed incomes lose, that is, those with incomes derived from ownership of bonds, preferred stock, mortgages, or from annuities and pensions. In this group will be widows, orphans and aged who are living on savings or on funds provided through insurance. A rapidly rising price level throws askew all plans for the future. A marked rise in the price level is equivalent to the loss of a part of the fund accumulated or contracted for. Upon the other hand falling prices result in business stagnation and failure. Investments decline in value; funds that presumably were safely disposed of are lost. Saving and insurance are discouraged. Systematic attempts to make adequate provision for old age or other contingency must be based on the assumption of a stable price level.
Others who lose in time of rising prices are creditors who are repaid in dollars of diminished purchasing power and the salaried and wage-earning class. The latter lose because of a characteristic lag in wage rates behind the prices of consumers' goods. Rising prices however stimulate business activity and the resulting full-time or over-time employment compensates the wage-earners in increased earnings for the diminished purchasing power of their hourly rates. Certain professional groups as ministers, teachers and public servants whose salaries are fixed by law or custom find it especially difficult to maintain their accustomed standard of living when prices are rising. Their incomes may for long periods be as fixed as those of annuitants or bond holders.
Over against those families who suffer economic hardship in a time of rapidly rising prices may.be set those who gain. Debtors as a class gain, and those who as independent business men or as stock-holders in a corporation are the claimants of the enlarged profits due to the fact that goods bought at one price level are sold at a higher. Farmers gain, as do manufacturers, wholesalers, retailers--all who engage in speculative enterprise. Stock-holders in public utilities whose rates are regulated by public authority may lose since these charges are not readily and quickly changed.
The gains of the debtor and entrepreneurial groups are not to be thought of as compensating for the losses of other groups. Neither the losses of the one nor the gains of the other have economic justification. The manifest injustices quite properly arouse dissatisfaction and complaint; organized labor strikes for wage increases; the cost of living theory of wages is vigorously upheld; the salaried groups make investigations and reports showing their economic losses. At the same time futile and unreasonable suggestions in regard to the cause and remedy for the situation are made. "Profiteering" is commonly alleged to be the root of the trouble while the clear-sighted view would show that the so-called profiteering, the acquisition of a new and unnecessary profit by the entrepreneurial group, is a result not a cause of the rapidly rising price level.
An equally harrowing picture could be drawn of the evils of a steadily declining price level, a picture of curtailment of production, unemployment, bankruptcy, failure to meet obligations.
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