Some aspects of inflation are still not intuitive. For example, sometimes inflation is a net benefit to the working class, and sometimes it’s harmful. When inflation is caused by wage increases, it’s good. But yea, Marxists should advocate tying monetary policy to labor time, where the central bank is legally obligated to ensure that the purchasing power of a dollar only goes up or down based on changes in productivity.
How do we know if [Can we know whether] the massive increases in services prices, like my car insurance increasing 38% in one year with no change in vehicle and no accidents or any points, and the absolutely astonishing prices at the grocery store, are actually due to the mechanisms you write about versus monopolies or near-monopolies jacking up prices?
I guess the polite term is "price gouging".
I get defensive when Covid stimulus checks are mentioned along with inflation, because the corporate media is constantly blaming ordinary people for the misbehavior of corporations and an absent government. As if ordinary Americans getting $600 in 2020 legitimizes my grocery bill doubling in 4 years.
Well, ordinary Americans are not "at fault" for that (also, it was $1,200 for individuals, more for families). The CARES Act was a $2.2 trillion dollar stimulus. I mentioned PPP loans as well, because it's all part of it. Obviously putting $1,200 in someone's pocket isn't individually going to destroy the economy, but injecting $2.2 trillion into the economy in a way that doesn't generate any new value is just straight up going to cause inflation. That isn't ordinary people's fault, it's straightforwardly unavoidable.
The M1 more than doubled and the M2 went up by around 31%. This is in no small part due to the CARES act, although it is not exclusively due to it (which I did say in the article and in my video). It's important that it is understood not as "blaming regular people," but as a policy decision by the Trump administration with consequences. It was popular because people were hurting and it got a lot of people over the hump, but that doesn't mean it has no economic effect.
Also, price gouging obviously exists but it is a separate phenomenon from inflation, which is about value rather than price (see Marx's "Value, Price, and Profit"). Price gouging is the increasing of price, while inflation is the increasing of the money supply, leading to its devaluation. Price gouging can be a response to inflation, however, as inflation automatically cuts margins for sellers. The response is often to overcompensate, which exacerbates the problem of inflation.
Some aspects of inflation are still not intuitive. For example, sometimes inflation is a net benefit to the working class, and sometimes it’s harmful. When inflation is caused by wage increases, it’s good. But yea, Marxists should advocate tying monetary policy to labor time, where the central bank is legally obligated to ensure that the purchasing power of a dollar only goes up or down based on changes in productivity.
How do we know if [Can we know whether] the massive increases in services prices, like my car insurance increasing 38% in one year with no change in vehicle and no accidents or any points, and the absolutely astonishing prices at the grocery store, are actually due to the mechanisms you write about versus monopolies or near-monopolies jacking up prices?
I guess the polite term is "price gouging".
I get defensive when Covid stimulus checks are mentioned along with inflation, because the corporate media is constantly blaming ordinary people for the misbehavior of corporations and an absent government. As if ordinary Americans getting $600 in 2020 legitimizes my grocery bill doubling in 4 years.
Thoughts?
Well, ordinary Americans are not "at fault" for that (also, it was $1,200 for individuals, more for families). The CARES Act was a $2.2 trillion dollar stimulus. I mentioned PPP loans as well, because it's all part of it. Obviously putting $1,200 in someone's pocket isn't individually going to destroy the economy, but injecting $2.2 trillion into the economy in a way that doesn't generate any new value is just straight up going to cause inflation. That isn't ordinary people's fault, it's straightforwardly unavoidable.
Look at the M2 money supply (M1 is physical currency in circulation, M2 is M1 + holdings): https://www.shadowstats.com/charts/monetary-base-money-supply
The M1 more than doubled and the M2 went up by around 31%. This is in no small part due to the CARES act, although it is not exclusively due to it (which I did say in the article and in my video). It's important that it is understood not as "blaming regular people," but as a policy decision by the Trump administration with consequences. It was popular because people were hurting and it got a lot of people over the hump, but that doesn't mean it has no economic effect.
Also, price gouging obviously exists but it is a separate phenomenon from inflation, which is about value rather than price (see Marx's "Value, Price, and Profit"). Price gouging is the increasing of price, while inflation is the increasing of the money supply, leading to its devaluation. Price gouging can be a response to inflation, however, as inflation automatically cuts margins for sellers. The response is often to overcompensate, which exacerbates the problem of inflation.