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The New Economics: or How we Learned to Stop Worrying and Love INFLATION!

In Expodential increases in excessential problems! forum on December 2, 2021 at 12:12 pm

Paul Krugman wanted to stop it by creating a trillion dollar titanium coin. Milton Friedman said he could stop it by shutting down the printing presses at the mint, and Jerry Ford tried to stop it by selling Whip Inflation Now (WIN!) buttons–but we still have it, and stronger lately than for quite some time. The perceptive reader already knows we mean inflation, which almost everyone agrees results in the decline in purchasing power of a given currency. Maybe they should have called it deflaton, but they didn’t  Deflation is the obverse– the condition in which  purchasing power of money increases as prices decline. But that’s not important now.

Most people realize that inflation drives up prices of goods and services, because it takes more dollars to purchase the same items previously purchasable for less. And once upon  a time, that was deemed undesirable. You go to the store for a loaf of bread or a can of  soup or a six-pack of beer, and the cost is more than you anticipated or previously paid–what knavery is this? Inflation.

Remember when inflation was bad? No, not “bad” like intense–bad like bad; sort of like starvation was bad before Teri Schiavo was starved to death, or the CIA was bad before Valarie Plame was “outed,”or unemployment was bad until Nancy Pelosi realized it stimulated family time and brought out our hidden artistic skills, or, conversely,  like Russia was good until liberals discovered Trump got them to cheat Hillary out of the presidency–things like that. Things change, gentle readers, and we need to keep up with the times.

Well, lately we’ve been looking into the Left’s evolving attitudes toward soaring prices at the pump, the grocery store, and elsewhere, and we have to admit, from a properly modern perspective, inflation looks much less threatening. In fact, by overwhelming decree, it seems virtually benign, even salvific!

We admit, (in our neanderthalic benightedness), we once supposed there were certain, specific types of inflation that stayed pretty much the same.  Just to name a few, there was  demand-pull (which we at WOOF consider mythical because monetary supply actually drives it) and cost-push inflation , an interesting way of saying ‘inflation that causes inflation,’ and core inflation, which is inflation divorced from transitory effects (which is what we have now, if you ask us, which admittedly you didn’t). 

There is the additional category of dread “stagflation,” which most recently erupted in the 1970s when the United States abandoned the gold standard, ensuring the dollar’s free fall even as the value of gold soared, but you have to do something really bone-headed to cause it.

But now, surveying the more contemporary viewpoints, we find that excessive spending and failures to control the monetary supply are no longer so much as mentioned in current explications of the phenomenon. Surely were they of any remaining significance, they would be much discussed–but economists and feature writers are silent on these topics.

“A bundle of assumptions…”

“As surgeon general, I believe we can beat inflation if everyone just wears a mask and keeps social distancing!”

It seems there exist shockingly new kinds of inflation. One is essentially medical, and attributes inflation to COVID19. Another is beneficent–a view of inflation as essentially healthy, and the third is all about class struggle.  Finally we have what one might call the constructivist approach–or the dismissal of inflationary reality based on a reconsideration of its components–thus, George Calhoun, writing in Forbes, counsels that “Any measure of inflation is in reality a bundle of assumptions and adjustments, masquerading as a Concrete Fact. There are many ways to construct this ‘Fact,’ and many different ‘numbers’ that may wear the ‘inflation’ label.” (Mister Calhoun enjoys using quotation marks).

George Calhoun–raider of the statistical artifact!

Sifting through a lengthy list of inflationary markers, Calhoun wonders, “But does the number make inflation ‘look’ worse than it really is? Is there something wrong with the metrics?” Yes, he concludes; in other words, there is, in fact, no cause for worry. “The CPI has averaged about 2% for the past decade. However, last year it was only half that, as the pandemic crushed consumer spending and drove down prices…” See? CORONA caused inflation…or rather rebounding from it did…sort of. Thus Mr. Calhoun concludes, “The statistical bump isn’t real–it’s a statistical artifact.” So buy milk and gasoline, readers–a statistical artifact can’t bankrupt you!

Claudia Sahm–some fatiguing arguments…

There is also the fatigue-driven delusional, COVID inflationary complex. Really. Vox admits that with inflation surging, “it’s hard not to let a little bit of worry creep in,” but Claudia Sahm, a senior fellow at the Jain Family Institute tells Vox that “the economic situation — and pandemic situation — is much better for many people this year than it was last.”  I

“Whew! After all that, I’m too exhausted to think about inflation!”

It seems however that “People are exhausted. Workers, businesses are exhausted. We are moving in the right direction, but it is painful. One of the pain points is higher prices.[Good catch, Claudia!] Another big pain point is not having a job. Inflation is felt more broadly because the unemployment rate is back down.” Sahm doesn’t explain why she is moving to increase employment if, in fact, inflation has worsened because “unemployment is back down,” but that’s okay–she sums matters up by explaining that “because jobs have been coming back and also because the federal government put out a lot of economic relief, people …have, on average, enough money to pay those extra prices in the majority of cases.” [So inflation]”isn’t our biggest problem right now. Covid is.” Good thing. Otherwise, we guess, spending all that money on “economic relief” might be inflationary!

It’s the bounce-around that gets you…

At QUARTZ, Nate DiCamillo insists “The latest uptick in US inflation is not as bad as it looks” (Which in isolation may safely be deemed the prevailing theme here), although in this case, DiCamillo suggests, “Food and energy bounce-around'” [a previously unrecorded economic marker] is distorting our impressions of the economy.” Also,”higher rents are cause for worry only if they continue rising at September’s rate for multiple months.” One suspects Mr. DiCamillo is not renting an apartment currently.

At the SOAPBOX cite, author Faiz Shakir urgently relates that “The real inflation problem is corporate profiteering,” as if we hadn’t suspected as much, and cautions, “Don’t be hoodwinked. It isn’t Joe Biden who’s making record profits and gouging U.S. consumers. That would be corporate America.”

INVESTOPEDIA: Remains nonchalant, assuring subscribers that”Inflation is and has been a highly debated phenomenon in economics…the word “‘inflation’ has different meanings in different contexts.” –But not to worry: “Inflation is viewed as a positive when it helps boost consumer demand and consumption, driving economic growth.”

INVESTOPEDIA advisers are constantly on the lookout for economic growth!

Strategic Advisor” Sean Ross tells us, “When the economy is not running at capacity, meaning there is unused labor or resources, inflation theoretically helps increase production. More dollars translates to more spending, which equates to more aggregated demand. More demand, in turn, triggers more production to meet that demand.” Searching through the history of economics for a propitious figure who supports this point of view, Ross hits upon John Maynard Keynes.

Our comrades at THE INTERCEPT are even more certain it’s no big deal–in an article by Jon Schwarz, entitled “Inflation is Good for You,” Schwarz suggests that inflation is just a symptom of class struggle: “In fact, it may be the fundamental class conflict: that between creditors and debtors, a fight that’s been going on since the foundation of the United States. ” That’s because “inflation is often good for most of us, but it’s terrible for the kinds of people who own corporate news outlets — or, say, founded coal firms. And a panic about inflation usefully creates the conditions to weaken the power of working people.” (But it’s still good for you)

The point Schwarz makes to his readership is that inflation is their friend and dreaded only by those who are susceptible to capitalist agitprop.  “Don’t panic over milk prices,” he entreats the masses,  “Inflation is bad for the 1 percent but helps out almost everyone else.”  Maybe only one percenters drink milk–we’re not sure. 

Seemingly, the New York Times lacks an economics bullpen of sufficient sophistication and modernity to compose an editorial detailing informed agreement with those cited above, but the Gray Lady gamely dusted off an editorial from 1975 to more or less the same effect and posted it, forgetful perhaps that it was originally intended to quell fears of the phenomenon in the inflationary era of Jimmy Carter.

As if…

Thus, the Times gave pride of place to a 46-year-old article entitled “Inflation–it’s not the real problem,” by Andrew F. Brimmer, evidently without the slightest glimmering of irony. Sadly, Dr. Brimmer went to his reward in 2012, so all inquiries should be forwarded to the NYT Archives division.. 

In summation, it seems a remarkable number of things cause inflation–while much inflation is either hallucinatory, or springs from a bizarre array of novel causes, in many cases actually beneficial to the commonweal. 

Once upon a time, it seemed as though we could, if appropriately tutored, more or less agree on what caused inflation. Put simply, it was too many dollars chasing too few goods and services.

We Conservatives know whom to blame when inflation stalks the tracks of an adversarial administration—obviously, we blame the administration. If its our administration, we blame congress—and if its our congress, we blame a seemingly pathological reluctance to curb spending (our implicit means of blaming the welfare state’s growing resemblance to Leviathan).  And we’re not wrong. Inflation in reality stems from some fairly basic sources and runaway spending is usually contributory.

“…we Conservatives know whom to blame..”

Other Americans just blame a stolid, faceless entity called “prices” at first, some remain so lost in liberalism as to persist in blaming “the price setters,” (think: corporations) but sooner or later, if the pain persists, even the most piteously gob-smacked ninnyhammer will blink, and in a moment of clarity mumble something akin to: “It’s the damned government!” And therein resides President Biden’s difficulty. To most Americans, he is the damned government, and outspokenly proud of it, too.

The takeaway…

And that’s the important news, gentle readers! We would be daft to suppose we could end conjecture regarding the components, let alone the causalities, of inflation right here on our little blog. (And none of us is quite that daft—we checked). No, the main points are these:

Inflation also makes clothing difficult to pay for.

Inflation is growing, no matter why or how.  (Strangely, also, we predicted as much—but that’s not important now). Moreover, it seems Mr. Biden’s guy at the Fed has yet to learn to stop worrying about it. On November 30th, Federal Reserve Chairman Jerome Powell, (whom President Biden only recently nominated for an additional term), declared the adjective transitory unhelpful, because it [wrongly] implies “short lived.” The chairman said it is time to retire it from the conversation. In other words, inflation is clearly here for a prolonged visit.  If only Chairman Powell knew what a good thing it is, he probably wouldn’t sound so  dour.

You can fool most of the people, or maybe mostly not.

The late, great, Everett Dirksen.

Second, its rapid growth  has invited a cavalcade of alibis from Leftist economists that are, if nothing more durable, at least amusing in the nonce. And third, the old adage attributed—perhaps apocryphally– to the late Senator Everett Dirksen, remains a viable standard for communal awareness; to wit, “a billion here–a billion there–and after a while you’re talking about real money.” People get that.

Americans, in other words, are becoming sensible of the fact that their dollars, hard earned or otherwise, are rapidly shrinking; and they aren’t pleased about the fact, nor are they buying fantasies that only one-percenters are suffering, or that aggregate demand is wonderful because John Maynard Keynes said so back in 1931. What they are buying, they fully realize, costs too much– and is costing more by the day. Consider this, lately from BING News:

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