Inflation and the six-million-dollar man
Peter McGahan
Monday 1st September, 2025.
WHEN I think back to ‘how simple life was’ when I was a wee, dark-haired chap, I feel the words from the journalist, Mary Schmich, poke in my back: “Accept certain inalienable truths: Prices will rise. Politicians will philander. You, too, will get old. And when you do, you’ll fantasise that when you were young, prices were reasonable, politicians were noble, and children respected their elders. Respect your elders.”
You may also remember it from the song ‘wear sunscreen’ by Bahz Luhrman which includes many great points including one to preface my points I will make today: “Be careful whose advice you buy but be patient with those who supply it. Advice is a form of nostalgia. Dispensing it is a way of fishing the past from the disposal, wiping it off, painting over the ugly parts and recycling it for more than it’s worth”. More on that later.
Steve Austin (The $6m dollar man) was: ‘a man barely alive, we can rebuild him’. The opening commentary of the show wasn’t supposed to sound like many western economies today, but it resonates.
He was a great guy, a hero with great sight and strength and – what a runner. He used his powers to deal with bad stuff and bad people. He was well worth the $6m, and I tuned in each week with anticipation for what he would do…until they made the Bionic woman, and my priorities changed.
Today with inflation, Steve Austin would cost $43.7m, but if I look at the cost of US healthcare, its inflationary rises of 1388.37 per cent since the show began in 1973 would take his rebuild to $89.3m. Still worth it of course, given how governments waste money, but neither would be a catchy show title, unless detail was your thing.
With Trump’s handlers nudging him to oust a member of the Federal Reserve – an authoritarian power grab and a court case he needs to lose - his ‘story’ or ‘distraction’ may be about him knowing better than others and those who run the Federal Reserve. I’ll leave the latter point for him to display and prove with ease, but to lean you one way - his business ventures have filed for corporate Chapter 11 bankruptcy protection six times. Enjoy your popcorn.
Interest rates have long been used as a measure to slow economies with mixed results and therein lies our next addition to metaphors and thoughts. It’s from F Scott Fitzgerald who eloquently put it: “The test of a first-rate intelligence is the
ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”
In a world where we are fed binary stories and beliefs and coached to think binary, (you are with us or against us; black v white; Protestant v Catholic; Blue v Red) the answer lies in deeper non-binary thinking. The more opposing thoughts we can hold the better - before we can safely conclude without prejudices, beliefs or emotions. How often do we look at decisions with hindsight where those three points have led us astray?
Inflation, money supply, and in turn interest rates can have a very difficult impact on all our lives, and I will cover those over the coming weeks from questions I have been asked.
There are two meaningful approaches, or camps of thinking to consider, and I’ll cover their successes next week, as well as their views: Mainstream / institutionally trusted specialists, and the independent, non-traditional and not conforming to orthodox thinking.
The former are the economists often cited by central banks, the IMF, and academia. Their work is technically rigorous, but often rooted in government or central-bank frameworks.
They are “trusted” by institutions, but they mostly work within the orthodoxy that inflation equals excess demand, wage pressure, money supply, or expectations, and is best handled by central banks raising rates.
The latter economists are more aligned with not being controlled by governments but understanding cause and effect. They question orthodoxy and highlight structural, financial, and monopoly factors, for example, inflation doesn’t equal wage growth, but rather power imbalances (corporate mark-ups, finance, energy); Interest-rate hikes hurt workers and producers more than monopolies, and real solutions involve breaking monopolies, regulating rent extraction, and addressing supply constraints.
I’ll present their argued thoughts on inflation next week, irrespective of Trump.
If you have a question on inflation or finance, please call 01872 222422 or email info@wwfp.net
Peter McGahan is the Chief Executive Officer of independent financial advisers Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
