Here's further data to prove the point that food prices have risen not because of inflation but because the wheeler-dealers are doing to the commodities market what they did to real estate throughout the Bush presidency.
Some time ago, we talked about the National Inflation Association, the Libertarian scam run by penny stock newsletter pusher Jonathan Lebed. In fact, I made a movie about them. (A pretty good one, too -- if I do say so meself.) The NIA's shtick is to convince people that Weimar-style inflation is a-comin', so you had better buy the gold mine stocks that the NIA is peddling, because pretty soon gold will be the only thing worth anything, yada yada yada. You know the drill. These guys "proved" that inflation is a problem by pointing to price rises in commodities. But those rises were the result of speculators at work. What stuns me is that FOX New got into bed with the notorious Lebed and pushed the scam.
Inflation has not been a problem in ages. During the Bush era, we would have had disinflation if not for the go-go real estate market. But now? Well, interest rates may have to go up, due to the S&P downgrade. And higher interest rates should have an inflationary effect. The real question is: Will wages spiral upward? That seems unlikely, given our monstrously high unemployment.
Jesus. I've never seen such a bad economic situation.
It's starting to look like we're entering a pre-revolutionary period. Alas, given the infinitude of Libertarian propaganda foisted on the public, any revolution we're likely to have will be one that you don't want to see.
2 comments:
"And higher interest rates should have an inflationary effect."
I think not. When Paul Volcker was Chairman of the Fed, interest rates went up and inflation went down. In times of high interest rates, less money is available for business ventures because bonds are less risky and provide a good return. A lower money supply ensues and hence lower inflation.
DM
It wouldn't wholly surprise me if an 'advanced' western country such as the US did suffer heavy inflation in the coming period - because of a drastic fall in production including of machinery and materials, and consequent large rise in production costs per item. This didn't happen in the US in the 1930s, but it did happen in Russia in the 1990s.
Not everything can be argued in terms of the availability of credit, which is what "supply-sidism" (a mindfucky name if ever there was one) boils down to.
A US Fed rate rise did lead to a fall in inflation in the early 1980s. This was a temporary solution to falling output, involving raising interest rates and borrowing massively from abroad. But today is different with the US being downgraded. This is the end of a 'boom' lasting generations, characterised by the insane dominance of finance capital and its ideology and assumptions. If finance capital (which represents capital as a whole) gets its way, we are talking not just falling output but famine as the only alternative to social revolution.
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