CLARKONOMICS: New stats show that the inflation level at wholesale was 7.5% last year. It's been a long time since we had similarly bad numbers. Some of Clark's staff -- namely Joel -- weren't even born the last time we were in such a squeeze. At the same time, housing prices have declined 9% year-over-year in some big markets. That's the biggest decrease ever in the Case-Shiller home price index. So the things we own have gone down in value, while the things we buy are going up in price. That's why people feel ill at ease, even if they're relatively comfortable in their own lives.

There's also a push/pull going on between lenders and homeowners. On the one hand, you have Bank of America leading an initiative on Capitol Hill to dump the cost of low-performing mortgages on taxpayers. Meanwhile, there's also a move to establish cram-downs for homeowners. That's where you get a judge to reduce your loan to the current value of the house. Clark is opposed to both extremes. BoA's move is outrageous, and cram-downs -- while frequently done in commercial real estate -- would undermine the confidence of investors with disastrous long-term results. The reality is that we'll have to work through the housing and inflation issues by readjusting how we spend.

Think about groceries: With costs rising, you've got to fight back by using coupons; buying in bulk when dry goods are on sale; and trading down in brand when you shop. You should also heed the common sense wisdom: Never shop on an empty stomach; don't go down the candy, ice cream or cereal aisles with your kids; and get your children involved by having them clip coupons and giving them a percent of the savings.