Today’s discussion is focused on inflation and its much-debated return after many many decades. We thought we would structure our discussion around certain key questions. What is inflation? What is the textbook definition? How has it been understood in the past? What causes inflation? What are the supply and demand-side factors? Given that capitalism is considered such a powerful productive machine, why are the most powerful capitalist countries suffering from inflation today? What does it say about their productive system? What is, in fact, causing the current inflation? What is the Federal Reserve in the United States particularly — the most powerful central bank in the world — doing about it, and what’s wrong with what the Federal Reserve, and many other central banks, are doing? So Michael, why don’t you just start with your thoughts on the first question.
On Friday, Jan. 13, Treasury Secretary Janet Yellen wrote to Congress that the U.S. government will hit its borrowing limit on Jan. 19, forcing the new Congress into negotiations over the debt limit much sooner than expected. She said she will use accounting maneuvers she called “extraordinary measures” to keep U.S. finances running for a few months, pushing the potential date for default to sometime in the summer. But she urged Congress to get to work on raising the debt ceiling. Lifting it above its current $31.385 trillion limit won’t be easy with a highly divided and gridlocked Congress. As former Republican politician David Stockman crowed in a Jan. 11 article: 15 [House] votes and the slings and arrows of MSM opprobrium were well worth it. That’s because the GOP’s anti-McCarthy insurrection obtained concessions which just might slow America’s headlong rush to fiscal armageddon. And just in the nick of time! We are referring, of course, to the Speaker elect’s promise that there will be no more debt ceiling increases without off-setting spending cuts; and that in the event of a double-cross a single Member of the House may table a motion to vacate the Speaker’s chair.
Federal Reserve chair Jerome Powell is profit’s prophet and the corporate media are his cultish devotees, joining hands to sacrifice working people. In this cult, profit is sacrosanct. When inflation hits, this is because of the conditions upon which profits are made. It’s not the fault of profit-making itself. The problem is a “labor shortage,” or “too much demand,” which forces the invisible hand to raise prices—and not a shortage of dignified work, or a surplus of people living paycheck to paycheck. Maximal profits are a given, and scarcity for ordinary people is a requirement. This catechism means that, even if reporters in corporate media are sympathetic to working people’s struggle with the increasing costs of living, the group that inevitably needs to take a hit to curb inflation is, you guessed it, still working people.
“There is no sense that inflation is coming down,” said Federal Reserve Chairman Jerome Powell at a November 2 press conference, — this despite eight months of aggressive interest rate hikes and “quantitative tightening.” On November 30, the stock market rallied when he said smaller interest rate increases are likely ahead and could start in December. But rates will still be increased, not cut. “By any standard, inflation remains much too high,” Powell said. “We will stay the course until the job is done.” The Fed is doubling down on what appears to be a failed policy, driving the economy to the brink of recession without bringing prices down appreciably. Inflation results from “too much money chasing too few goods,” and the Fed has control over only the money – the “demand” side of the equation.
The Federal Reserve has responded to runaway inflation by hiking up interest rates at the same time that Americans are drowning in historic levels of personal debt. With interest rates up, prices will only rise faster than wages, hitting the vast majority of people with stagnant or declining wages in real terms. The result is yet another upward transfer of wealth to the minority of capitalists responsible for the crisis in the first place. Economist Richard Wolff joins The Chris Hedges Report to discuss the origins of the inflation crisis, the Fed’s response, and what this all means for working people. Richard D. Wolff is Professor of Economics Emeritus at the University of Massachusetts, Amherst and a Visiting Professor in the Graduate Program in International Affairs at the New School. He is the host of the weekly program Economic Update, and the author of several books, including his most recent title, The Sickness in the System: When Capitalism Fails To Save Us From Pandemics or Itself.
Soon after arriving in Oslo, my taxi zigzagged through the city’s well-organized streets and state-of-the-art infrastructure. Large billboards advertised the world’s leading brands in fashion, cars, and perfumes. Yet, amid all the expressions of wealth and plenty, an electronic sign by a bus stop flashed the images of poor-looking African children needing help. Over the years, Norway has served as a relatively good model of meaningful humanitarian and medical aid. This is especially true compared to other self-serving western countries, where aid is often linked to direct political and military interests. Still, the public humiliation of poor, hungry and diseased Africa is still disquieting. The same images and TV ads are omnipresent everywhere in the West.
Athens, Greece - Workers walked off the job in Greece and Belgium on Wednesday during nationwide strikes against increasing consumer prices, disrupting transportation, forcing flight cancellations and shutting down public services in the latest European protests over the rising cost of living. In Greece, where workers were holding a 24-hour general strike, thousands of protesters marched through the streets of Athens and the northern city of Thessaloniki. Brief clashes broke out at the end of demonstrations in both cities, with small groups of protesters breaking off from the main march to throw Molotov cocktails and rocks at police, who responded with tear gas and stun grenades. The clashes were over within minutes.
Federal Reserve chair Jerome Powell’s recent speech at the Jackson Hole conference, delivered to an audience of central bankers from around the world, was a highly anticipated event. He arrived there a chastened man, having previously claimed that US inflation was a transitory phenomenon while implementing the lax monetary policies that many blamed for its recent surge. Could he now pull off a ‘soft landing’, bringing inflation back down from its forty-year high of 9.1% to the desired 2%, without causing a recession? Central banks have various tools at their disposal for managing inflation: higher rates, quantitative tightening (i.e. selling assets to reduce liquidity in the system) and managing expectations about future monetary policy through ‘forward guidance’.
On Saturday, November 5, over 15,000 people marched in London to protest the policies of the Tory government that have failed to tackle the soaring cost of living crisis and its attack on working class sections and social movements. The protest demonstration was called by the People’s Assembly Against Austerity, trade unions, including the National Union of Rail, Maritime and Transport Workers (RMT), National Education Union (NEU), Communication Workers Union (CWU), Unite the Union, Trade Union Congress, and ASLEF, and groups such as Stand Up To Racism, Campaign for Nuclear Disarmament, Just Stop Oil, Extinction Rebellion, and Keep Our NHS Public. Political parties including the Communist Party of Britain (CPB), Young Communist League (YCL-Britain), and MPs from the Labour Party also participated in the protest.
Scotland is world famous for its breathtaking beauty, rich history, and impossibly cute cows. It’s also known for its community spirit, evidenced by a new government initiative: a combined rent freeze and eviction moratorium, designed to help people through the current cost of living crisis. First Minister of Scotland Nicola Sturgeon said the legislation is a response to the “humanitarian emergency” caused by skyrocketing energy prices, among other factors, Sky News reports. The program will remain in effect until at least March 31, 2023. “This Program for Government is published in the context of the most severe cost crisis in many of our lifetimes. It is a crisis pushing millions into poverty and poses a genuine danger, not just to livelihoods, but to lives,” Sturgeon said in a press release.
The biggest supervillains in the world are not human: they’re corporations. And one of those corporations owns nearly our entire food system. This year, food prices have soared and Americans are feeling it. For example, egg prices have doubled since last year to nearly $3 a dozen, which is especially difficult if you make your living as an egg-juggling busker down by the condemned jungle gym. But the supervillain companies that set those prices aren’t struggling at all. The largest one is Cargill. And this year, Cargill’s revenue jumped to a record $165 billion. That’s $30 billion more than the year before. Let’s learn a little more about Cargill. Known to friends as the evilest company in the world – and to enemies as even worse than that – Cargill Inc. is the biggest privately owned company in the U.S., and they own a large chunk of every portion of the food that ends up on your plate.
If you’re having trouble making ends meet right now, you’re not alone. Nearly 52 million adults – about 1 in 4 – are having difficulty paying for usual household expenses, according to the most recent Census data, and, according to Monmouth polling, more than 4 in 10 Americans, 42 percent, “say they are struggling to remain where they are financially.” So let’s split the difference between those numbers and say one in three American adults say they’ve found it difficult to cover expenses or pay bills. Does that sound like a system that’s working well? Does that sound like a machine that is just humming along beautifully? Does that sound like citizens are living the American dream? This system is clearly not working for everyone and this is happening while rich-ass Congresspeople do next to nothing to help Americans.
The world’s central bankers, almost without exception, are now busy swinging sledgehammers. Only whopping interest-rate hikes, they’re preaching, can pound down inflation’s rising prices. In the United States, the Federal Reserve has so far this year raised the nation’s benchmark interest rate by three points, something that hasn’t happened since the 1980s, and still more rate hikes, the Fed pledges, are coming. These interest-rate boosts, the central banker reasoning goes, will slow the economy, deflate consumer demand, and get prices shrinking. The downside? Federal Reserve chair Jerome Powell is readily acknowledging the hardships rate hikes are provoking. The slower growth and softer labor market rising rates make inevitable, Powell conceded this past August, “will also bring some pain to households and businesses.”
Thousands of people across the UK took to the streets Saturday and Sunday to protest the climate and cost-of-living crises, which demonstrators linked to the country’s dependence on fossil fuels. Saturday’s protests were joined by thousands of people in major cities from London to Glasgow to Belfast, as the Press Association reported. On Sunday, 250 demonstrators from the group Just Stop Oil marched through London and blocked its Waterloo Bridge for the second day in a row, the group said. “I’m doing this for my son,” one demonstrator said as she was arrested Sunday. “The government’s inaction on climate change is a death sentence to us all. The United Nations has said we should have no new oil. Liz Truss wants to open 130 new oil licenses. That’s a death sentence to this planet.”