An interesting article not without merits but then you come to unquestioned excuses: articles of faith like this-
" As economists well know, the very possibility of tackling inflation rests on relieving the upward pressure on prices by diminishing consumer demand. To do so, the Fed will curtail the purchasing power of most citizens – especially those who have the least."
- Fine theory but the current inflation crisis can't be caused by "increased demand" because there is none, Neither in the US nor the UK: as the very same Guardian points out several times. In fact demand is falling for even the most essential goods:
UK and US consumer confidence hits record low; Britons cut back on food shopping – as it happened
What they all really know but don't want to say is that its Global supply chain inflation caused by the Covid Pandemic, Western (self-)imposed sanctions and in the case of the UK, (again self-imposed) Brexit. Scarcity, increased costs and increased transport fees makes goods expensive and all the above have contributed to that. Over all this we have commodity pumping and price gouging being carried out by every capitalist able to see a good opportunity to blame others and get away with it.
Raising interest rates will do absolutely nothing to reduce inflation caused by supply side scarcity of goods and increased costs. Reduced spending in both the US and UK shows demand is already crippled by inflation itself. Thus contracting peoples income by increasing the actual cost of their debts:"...curtailing their purchasing power" will in fact acerbate the problem and guarantee a far deeper recession.
"Increasing interest rates to control inflation" is the mantra of Neoliberalism: a philosophy in which the only tool they chose to have is the cost-of-money hammer. Consequently, everything else is a nail.
The author certainly points out that it indeed disadvantages the poor, but worse than this is that they will all be suffering to no advantage for most of the wealthy either because it simply won't work.
So what's the game? The only conclusion to be generous, is that capitalist economics is caught up in loop where misapplied dogma is more important than fact. To be less generous, that it is deliberate policy intended to impoverish all of society excepting of course that tiny sector who own and control the money they intend to make more expensive: it's no longer a matter of capitalist economics but exclusively of financiers economics.
Something tells me the capitalism in the west is irreformable ..
Posted by sinister burt on June 28, 2022, 11:55 am, in reply to "The Economy Stupid..."
Neoliberalism has always had this double layer: some of the bottom feeders/journalists/new labour people may actually believe the lower layer that almost makes it sound like an ideology (the rising tide will raise all the boats etc - they've got a whole list of cliches), and attempt to convince the plebs of it. The actual powerful/thinking ones all know it's the deliberate impoverishment one and always was, even when it was called something else.
I think Mick Lynch and the other RMT bloke (ed Ramsay is it) put it well when they say, wherever it comes from, it's an ideological choice who is going to pay for the inflation, the poor or the rich - the rich own all the opinion formers/farmers so usually 'there is no alternative' to what they want to do. Imagine how popular a labour leader who said that could be (well for a few months, until they can turn them into the baddies) - but it's the old Chomsky/marr formulation: if they did think that, they wouldn't be sitting where they're sitting (ie in the shadow cabinet/nec/etc) - they aint going to make the Corbyn mistake again.
on June 24, 2022, 10:19 pm