Jonathan Schwartz, writing in The Intercept, has a correction to make: Whenever the corporate media moves en masse like this, it’s a good idea to slow down and consider what’s actually happening, and why.
. . .And a panic about inflation usefully creates the conditions to weaken the power of working people.
". . .And what’s happening is this:
The inflation freakout is all about class conflict.
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.
> Yesterday's stories were generated by the
release of inflation numbers for October by the U.S. Bureau of Labor Statistics. BLS found that prices for all goods rose 0.9 percent in the last month.
In other words, on average, products that cost $10.00 in September now cost a terrifying $10.09.
> Also, overall prices are now 6.2 percent higher than they were a year ago.
So something that cost $10.00 in October 2020 is now $10.62.
You’ll notice here that both the Times and Post were misleading about this.
The Post headline — “Prices climbed 6.2 percent in October compared to last year” — makes it sound like prices went up 6.2 percent in October, i.e., in one month. The Times similarly has a graph with a label saying prices went up “6.2 percent in October.”
That truly would be a problem. Fortunately, that didn’t happen.
QUESTION:
So why has inflation seized the imagination of the corporate press? It’s simple.
>
First, inflation lessens the real value of debt. In 2020, American households had around
$14.5 trillion in debt from their mortgages, credit cards, student loans, and other sources. Inflation of 6.2 percent means that the real value of that $14.5 trillion is now just $13.65 trillion in last year’s dollars. . .[ ]
> Second, inflation generally accompanies economic booms, when the unemployment rate is low and workers have the market power to demand higher pay.
That’s what’s happening now: As prices increased 6.2 percent over the past year, wages for regular people
went up 5.8 percent. In other words, inflation barely touched their purchasing power. And with
almost 300 labor strikes in the U.S. so far this year, workers are leveraging their power to demand better compensation at historic rates. So while inflation can be a significant problem for workers if they don’t get it back in higher paychecks, that seems unlikely today.
>Then add to higher paychecks the fact that the median American recently had
about $65,000 in debt. Inflation has reduced the real value of this debt by almost $4,000 over the past year. With that added to pay increases, most people have come out significantly ahead.
Put these two things together — lowered values for their assets and higher wages for workers — and you can understand why the rich people who run the U.S. absolutely detest inflation.
However, there is one rock that can kill both these birds at the same time. The Federal Reserve can raise interest rates. This would slow the economy and increase the unemployment rate, lessening worker bargaining power. Less bargaining power would mean lower or nonexistent raises, which would eventually translate into lower inflation.
That’s what all yesterday's inflation panic is ultimately aimed at: creating an economy with higher unemployment, lower growth, and more frightened workers.
Whether America’s creditors can make this happen remains to be seen, but we shouldn’t have any illusions about what they’re trying to do. And we definitely shouldn’t help them do it."
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RELATED CONTENT: U.S. Bureau of Labor Statistics
https://www.bls.gov/news.release/cpi.nr0.htm
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