The US War party/establishment has two right wings (DNC and GOP) -- both are utterly corrupt and share identical imperialist foreign policy and same donors.
Since the US has been, for several decades already, on a decline it is unlikely that oligarchs will be able to control themselves while fighting for ever smaller pieces that they still can steal.
In 2022, as in most historical cases, the right-wing party that will win -- will be the one that will better lie. Since corporate media, HiTech monopoly oligarchs, CIA/arms industry, Wall Street mega-gangsters are tightly integrated for now with DNC oligarchs, the 2022 elections are largely predetermined.
A different outcome is possible only if the donors/election makers switch back to GOP - that is unlikely and possible only if GOP gets rid of the incompetent clown Trump, who defeated himself in 2020.
I must confess, Mr. Auerback, I am confused as to where you’re going with this piece. In my opinion, the situation is far more complex than you suggest. I gotta say that I love your I’ll know it when I see it and frankly, a 5% increase in the core CPI looks like it to me.
There are three (at least) types of inflation: Demand Pull where the demand for goods and services outstrips the supply of said things. This, of course, is what you described. The second is called Cost Push and occurs when the costs of the inputs to the productive process rise, thus forcing business to raise their prices to keep their bottom line up. Both of these are Keynesian economics phenomena. The third type comes from Uncle Miltey of the Chicago School of Economics and is an excess of monetary supply. This is actually where you find too much money chasing too few goods. And I count a fourth that I call Government Idiots.
Personally, I struggle with the idea that we are seeing demand pull inflation today. Where’s the uptick in demand coming from? Significant parts of the country remain with COVID restriction and those who were able to keep their jobs by working from home probably don’t have any reason to start spending more money.
I do see cost push happening (as a subset of Government Idiots). Donny Murdo’s genius move to black list any number of Chinese firms is hurting US firms. This kind of disruption of the supply chains goes beyond Chinese companies can’t buy from the US. The US can’t buy from China because they no longer have what they used to sell us because the government sanctions mean that they can’t get what they need to make what they sold us. The demand for chips is far outstripping the supply of chips world wide for everything from cars to refrigerators (?!?! chips in fridges? Who knew?) The price of chips is skyrocketing and this is the input to all kinds of product that will eventually find its way into the final price.
You should all know about the excess money supply. It’s called QE *. It’s important to understand what quantitative easing is. Banks have to maintain reserve assets to underpin their operations. It is a percentage of their assets (i.e. loans) and guess what reserve assets are! Treasury bonds. So what the Fed does is it buys up a portion of a bank’s loan and corporate bond portfolio and replaces it with T-bonds. Eh, Voilà the bank can now lend more money, just like that. This is probably why the bond markets are unimpressed with the 5% inflation. The Chicago School of Economics says that you can control all of this via the money supply. I suppose you can but it comes at a steep price. Every time you tighten the money supply, you run the risk of recession.
The government idiots category is always amusing. The star of this edition is Donny Murdo’s tariffs on China. He was going to punish China. ROTFLMAO. China didn’t pay the tariffs, US consumers did. That price increase probably is the major component of the 5% inflation you noted at the beginning of your piece. And it’s not going away as long as we keep the tariffs in place.
There is one final pitfall that I didn’t mention. The US debt is, according to the Treasury Department, over $28T our GDP is around $21T. I well remember August 1971 when I was just about to start on my masters in physics and Nixon imposed wage and price controls and took the US off the gold standard. Why did this happen? The US had blown an incredible amount of money on Vietnam and hadn’t paid for it with taxes. Does this sound familiar? I fear this will be a reprise of the ’70’s. Including the St. Ronnie’s screw job on the working class
When you talk about “hits at the heart of the current economic debate in the US and beyond”, this is what I think about.
The US War party/establishment has two right wings (DNC and GOP) -- both are utterly corrupt and share identical imperialist foreign policy and same donors.
Since the US has been, for several decades already, on a decline it is unlikely that oligarchs will be able to control themselves while fighting for ever smaller pieces that they still can steal.
In 2022, as in most historical cases, the right-wing party that will win -- will be the one that will better lie. Since corporate media, HiTech monopoly oligarchs, CIA/arms industry, Wall Street mega-gangsters are tightly integrated for now with DNC oligarchs, the 2022 elections are largely predetermined.
A different outcome is possible only if the donors/election makers switch back to GOP - that is unlikely and possible only if GOP gets rid of the incompetent clown Trump, who defeated himself in 2020.
I must confess, Mr. Auerback, I am confused as to where you’re going with this piece. In my opinion, the situation is far more complex than you suggest. I gotta say that I love your I’ll know it when I see it and frankly, a 5% increase in the core CPI looks like it to me.
There are three (at least) types of inflation: Demand Pull where the demand for goods and services outstrips the supply of said things. This, of course, is what you described. The second is called Cost Push and occurs when the costs of the inputs to the productive process rise, thus forcing business to raise their prices to keep their bottom line up. Both of these are Keynesian economics phenomena. The third type comes from Uncle Miltey of the Chicago School of Economics and is an excess of monetary supply. This is actually where you find too much money chasing too few goods. And I count a fourth that I call Government Idiots.
Personally, I struggle with the idea that we are seeing demand pull inflation today. Where’s the uptick in demand coming from? Significant parts of the country remain with COVID restriction and those who were able to keep their jobs by working from home probably don’t have any reason to start spending more money.
I do see cost push happening (as a subset of Government Idiots). Donny Murdo’s genius move to black list any number of Chinese firms is hurting US firms. This kind of disruption of the supply chains goes beyond Chinese companies can’t buy from the US. The US can’t buy from China because they no longer have what they used to sell us because the government sanctions mean that they can’t get what they need to make what they sold us. The demand for chips is far outstripping the supply of chips world wide for everything from cars to refrigerators (?!?! chips in fridges? Who knew?) The price of chips is skyrocketing and this is the input to all kinds of product that will eventually find its way into the final price.
You should all know about the excess money supply. It’s called QE *. It’s important to understand what quantitative easing is. Banks have to maintain reserve assets to underpin their operations. It is a percentage of their assets (i.e. loans) and guess what reserve assets are! Treasury bonds. So what the Fed does is it buys up a portion of a bank’s loan and corporate bond portfolio and replaces it with T-bonds. Eh, Voilà the bank can now lend more money, just like that. This is probably why the bond markets are unimpressed with the 5% inflation. The Chicago School of Economics says that you can control all of this via the money supply. I suppose you can but it comes at a steep price. Every time you tighten the money supply, you run the risk of recession.
The government idiots category is always amusing. The star of this edition is Donny Murdo’s tariffs on China. He was going to punish China. ROTFLMAO. China didn’t pay the tariffs, US consumers did. That price increase probably is the major component of the 5% inflation you noted at the beginning of your piece. And it’s not going away as long as we keep the tariffs in place.
There is one final pitfall that I didn’t mention. The US debt is, according to the Treasury Department, over $28T our GDP is around $21T. I well remember August 1971 when I was just about to start on my masters in physics and Nixon imposed wage and price controls and took the US off the gold standard. Why did this happen? The US had blown an incredible amount of money on Vietnam and hadn’t paid for it with taxes. Does this sound familiar? I fear this will be a reprise of the ’70’s. Including the St. Ronnie’s screw job on the working class
When you talk about “hits at the heart of the current economic debate in the US and beyond”, this is what I think about.
Bring back the 91% top marginal tax rate.
Did not Dick Armey teach the masses thusly? "You tell me who did the study, and I'll tell you the results they got."