Different types of inflation have different characteristics:
- Demand-Pull Inflation, where spending drives prices up:
- There is more than a normal amount of money in the economy.
- It is easy to pay the bills. Times are good.
- We buy more than normal.
- The economy grows more than normal.
- There is more than a normal amount of money in the economy.
- Cost-Push Inflation, where cost drives prices up:
- There is more than a normal amount of cost in the economy.
- It is hard to pay the bills. Times are hard.
- We buy less than normal.
- The economy grows less than normal.
- There is more than a normal amount of cost in the economy.
- Is it cost-push or demand-pull?
- At the macro-economic level the economy grows less, or grows more.
- At the micro-economic level times are hard, or times are good.
- What about the current inflation?
- Important to remember that the current inflation followed three years of covid insanity, which followed the decade of rigor mortis that came after the financial crisis, and that the crisis was the result of six decades (1947-2007) of Increasing Reliance on Credit (IROC) that was created and encouraged by insane policy.
- Other than that, I'm currently looking at Excuseflation by Cory Doctorow, The Physical Capacity Shortage View of Inflation by Alex Williams, and Expecting Inflation: The Case of the 1950s by Alex Williams and others. I want to see how current thinking fits in with what I know of 1947-2007.
- With thanks to Lorraine Lee for the Doctorow link.
- Important to remember that the current inflation followed three years of covid insanity, which followed the decade of rigor mortis that came after the financial crisis, and that the crisis was the result of six decades (1947-2007) of Increasing Reliance on Credit (IROC) that was created and encouraged by insane policy.
3 comments:
Hello Art
Worth the time to listen to...
https://larspsyll.wordpress.com/2023/03/18/on-fighting-inflation/
Hey O.T.
Jon Stewart is so good!
At 0:43 Stewart says "our method for controlling [inflation] seems really much more focused on wages and employment".
Yeah, because shit runs downhill.
Larry Summers responds with the old Milton Friedman song and dance about disease and the side-effects of the cure. That's his best argument? Pathetic!
At 6:43 Stewart says anti-inflation policy is based on the principle that "wage inflation is driving inflation". Summers denies it, of course. And I cannot imagine Summers would go home, sleep on it, and wake up saying Jon Stewart is right!
It seems to me that Jon Stewart wants to create policies to address the extreme increase in non-labor income since the covid recession.
I think that to favor such policies is to accept the view that the existing policy (call it 'wage suppression') is acceptable. Jon Stewart is not saying we should stop wage suppression. He is saying we should also suppress profits.
Rather than building on the policy we already have, I think we should stop and evaluate the policy we have to see if we can improve it. After all, as Jon Stewart says, the policy is the problem.
To clarify -- I do not oppose policy that restricts the extreme increase of non-labor income. But I see the non-labor increase as the result of existing anti-inflation policy and other supply-side policies. So I think we should change the existing policies *first*, and focus on the non-labor increase later, if that problem still exists after the other changes are made.
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