Strongly agree with all you say. Our economic system has been designed by the richest people and their henchmen to benefit - you guessed it - rich people! Inflation doesn't hurt people without savings, as long as their incomes keep pace. Inflation helps those in debt as it shrinks the size of that debt, as long as interest rates aren't raised. Inflation does hurt those with savings, but then they have savings. Who should/can bear the cost of inflation - those with money or those who are in debt?
Also, raising interest rates artificially and temporarily raises the value of the currency, making imports cheaper and exports more expensive, putting that Country's workers out of work, increasing the trade deficit and reducing the demand for currency which reduces its value again - it's a downward spiral for an economy. I know many MMT economists think trade balances don't matter the majority of the electorate do, at a very pragmatic day-to-day experience level, and people like Trump play to it with talk of protecting jobs and income levels with tariffs. What is the MMT response?
Here in Australia, there is an attempt to abolish a never-used power which the Treasurer has to overrule the Reserve Banks decisions on interest rates, which attemp to keep inflation within a 2-3% range, so higher than the UK's 2% target. I hope it fails.
Inflation here is currently 2.8%, but the Reserve Bank is delaying cutting, claiming it is concerned about underlying inflation. The Albanese Government obviously wants rates falling before the federal elections, likely in March.
Trump's tariffs are unlikely to have much effect on Australia as we are more closely tied to China and Asia rather than the USA, which has a trade surplus with Australia, mainly in investment rather than products.
If Trump slashes the Inflation Reduction Act, which involves investing $80b in American renewables, then Prime Minister Albanese last week invited investors to bring their funds to Australia, so America's loss could be our gain. American workers would lose jobs, but we would gain them.
As for energy, we are experiencing a boom in investment in renewable energy, particularly solar, wind, hydro and increasingly batteries, which should enhance our national security by making us more energy independent. We just need more EVs to cut oil imports.
Workers pay for inflation, just as American workers will pay for Trump's tariffs in higher prices for consumer goods, raising inflation and requiring higher interest rates.
Yet Americans voted for Trump, voting to raise their own cost of living by imposing a tariff, like a sales tax, on themselves, to be collected by the US Government. A vote for Trump was a vote for higher taxes. Crazy!
Australia, which recently won a trade war which China tried to start with us, but failed, prefers free trade, which lowers the prices of products in shops. Consumers win, and our government has a surplus.
American politics is weird, just like Trump, as Walz correctly said.
The same people who pay for interest. The two are really two sides of the same wealth transfer coin.
Economists that tell you that inflation is necessary as a defense against deflation are absolutely wrong just as those who to say interest rates are control it or investment.
The single most important factor to most investment is business opportunity. But in dysfunctional economies, it’s speculation.
And the idea of a single number for inflation is pure garbage. Mathematical garbage. Cost of living has very little to do with CPI and a lot more to do with your family size host of other factors. Your personal cost of living determines whether or not you’re above or below water with respect to your income, your actual income, not so silly job’s number that might represent millions of people working one hour a week.
The Bank of England has a remit to keep inflation below 2%.
Sorry to be an annoying pedant, but the BoE wants inflation at 2% not below. This is the embedded growth obligation that Daniel Schmachtenberger says that either it has to die or we do.
There is an argument here in Australia that, if the aim is to control inflation by reducing the money supply, then raising interest rates is a dumb way to do it.
The alternative argument is to restrict the money supply by raising superannuation contributions for retirement savings.
This would have a number of benefits. It would still reduce the money supply, but the money would stay with the person, rather than inflating the profits of banks. People would have more savings for retirement.
I have a lot of sympathy with the various commentators promoting the benefits of an MMT approach over Neoliberal practice. For example, the MMT view is that inflation can be more directly controlled through taxation thus avoiding the pernicious effects of interest rate meddling. I tend to agree but clearly taxation itself is a tool of oppression if directed in the same way as interest rates. Which all leads back to the motivations of those wielding the power through these tools. Turkeys and Christmas comes to mind….
They will NEVER deploy price controls because Nixon proved they worked. Thus was why Weber was shouted down so harshly in a coordinated fashion in the MSM when she broached the topic. Price controls are THE best way to control our present type of inflation i.e. Greedflation.
Strongly agree with all you say. Our economic system has been designed by the richest people and their henchmen to benefit - you guessed it - rich people! Inflation doesn't hurt people without savings, as long as their incomes keep pace. Inflation helps those in debt as it shrinks the size of that debt, as long as interest rates aren't raised. Inflation does hurt those with savings, but then they have savings. Who should/can bear the cost of inflation - those with money or those who are in debt?
Also, raising interest rates artificially and temporarily raises the value of the currency, making imports cheaper and exports more expensive, putting that Country's workers out of work, increasing the trade deficit and reducing the demand for currency which reduces its value again - it's a downward spiral for an economy. I know many MMT economists think trade balances don't matter the majority of the electorate do, at a very pragmatic day-to-day experience level, and people like Trump play to it with talk of protecting jobs and income levels with tariffs. What is the MMT response?
Here in Australia, there is an attempt to abolish a never-used power which the Treasurer has to overrule the Reserve Banks decisions on interest rates, which attemp to keep inflation within a 2-3% range, so higher than the UK's 2% target. I hope it fails.
Inflation here is currently 2.8%, but the Reserve Bank is delaying cutting, claiming it is concerned about underlying inflation. The Albanese Government obviously wants rates falling before the federal elections, likely in March.
Trump's tariffs are unlikely to have much effect on Australia as we are more closely tied to China and Asia rather than the USA, which has a trade surplus with Australia, mainly in investment rather than products.
If Trump slashes the Inflation Reduction Act, which involves investing $80b in American renewables, then Prime Minister Albanese last week invited investors to bring their funds to Australia, so America's loss could be our gain. American workers would lose jobs, but we would gain them.
As for energy, we are experiencing a boom in investment in renewable energy, particularly solar, wind, hydro and increasingly batteries, which should enhance our national security by making us more energy independent. We just need more EVs to cut oil imports.
Workers pay for inflation, just as American workers will pay for Trump's tariffs in higher prices for consumer goods, raising inflation and requiring higher interest rates.
Yet Americans voted for Trump, voting to raise their own cost of living by imposing a tariff, like a sales tax, on themselves, to be collected by the US Government. A vote for Trump was a vote for higher taxes. Crazy!
Australia, which recently won a trade war which China tried to start with us, but failed, prefers free trade, which lowers the prices of products in shops. Consumers win, and our government has a surplus.
American politics is weird, just like Trump, as Walz correctly said.
Interesting thanks for sharing!
The same people who pay for interest. The two are really two sides of the same wealth transfer coin.
Economists that tell you that inflation is necessary as a defense against deflation are absolutely wrong just as those who to say interest rates are control it or investment.
The single most important factor to most investment is business opportunity. But in dysfunctional economies, it’s speculation.
And the idea of a single number for inflation is pure garbage. Mathematical garbage. Cost of living has very little to do with CPI and a lot more to do with your family size host of other factors. Your personal cost of living determines whether or not you’re above or below water with respect to your income, your actual income, not so silly job’s number that might represent millions of people working one hour a week.
The Bank of England has a remit to keep inflation below 2%.
Sorry to be an annoying pedant, but the BoE wants inflation at 2% not below. This is the embedded growth obligation that Daniel Schmachtenberger says that either it has to die or we do.
https://www.bankofengland.co.uk/monetary-policy/inflation
There is an argument here in Australia that, if the aim is to control inflation by reducing the money supply, then raising interest rates is a dumb way to do it.
The alternative argument is to restrict the money supply by raising superannuation contributions for retirement savings.
This would have a number of benefits. It would still reduce the money supply, but the money would stay with the person, rather than inflating the profits of banks. People would have more savings for retirement.
I think it's a good idea.
What do you think?
Excellent
I have a lot of sympathy with the various commentators promoting the benefits of an MMT approach over Neoliberal practice. For example, the MMT view is that inflation can be more directly controlled through taxation thus avoiding the pernicious effects of interest rate meddling. I tend to agree but clearly taxation itself is a tool of oppression if directed in the same way as interest rates. Which all leads back to the motivations of those wielding the power through these tools. Turkeys and Christmas comes to mind….
Personally I think Isabella Weber has it right - price controls can be really useful as a tool to manage inflation without the regressive consequences of solely using interest rates https://www.theguardian.com/business/commentisfree/2021/dec/29/inflation-price-controls-time-we-use-it
They will NEVER deploy price controls because Nixon proved they worked. Thus was why Weber was shouted down so harshly in a coordinated fashion in the MSM when she broached the topic. Price controls are THE best way to control our present type of inflation i.e. Greedflation.
Now that really would require a socialist government!