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This paragraph summarized the piece fairly well. It describes the ideology that the author thinks central bankers have: > The answer may be down to the grip of

This paragraph summarized the piece fairly well. It describes the ideology that the author thinks central bankers have: > The answer may be down to the grip of an economic ideology espoused by tenured Harvard Professors like Larry Summers and Ken Rogoff. Both appear to believe that inflation exceeds in its power all other threats. And that inflation is largely caused by rising wages (even as real wages are falling) - or even the expectation that wages might rise. That to suppress wages and therefore inflation, central bankers are required to continue hiking aggressively even if this does depress demand, raise unemployment and slash wages further. I don’t think that’s true though. The most mainline Keynesian would say that inflation has many more causes that just wage growth. And since one of the charter goals of the Fed is to reach maximum employment, I would imagine that rate hikes are trying to minimize impact on workers while still keeping inflation down (their real wages intact). The author, in my mind, has tunnel vision for workers’ rights and wages, and won’t see the impacts of 6% inflation on the lives of that same working class. The rhetoric makes me think that they’re boiling the frog for a more commanded economy.

lapcat 3y ago
> The author, in my mind, has tunnel vision for workers’ rights and wages, and won’t see the impacts of 6% inflation on the lives of that same working class. The very next paragraph after the one you quoted: "today’s inflation is caused by commodity market speculation, not wages. And if workers demand higher wages to deal with the inflationary impact of higher energy and other commodity prices - that is a consequence, not a cause of commodity price inflation"
- Kalium 3y ago
  Something can be both a consequence and a cause. That's how feedback loops work, and inflation is distinctly prone to feedback loops. Insisting that something is a consequence and therefore not a cause smells like politics being placed over rigor.
  - lapcat 3y ago
    The author has analyzed this elsewhere, for example: https://annpettifor.substack.com/p/grain-inflation-starve-the-poor-feed https://annpettifor.substack.com/p/grain-inflation-starve-th...
  - deleted 3y ago
    [deleted]
- mjburgess 3y ago
  So, absolutely nothing to do with the money supply? I mean, if it had to do with the money supply, then the fed is acting well to reduce it, right? https://d3fy651gv2fhd3.cloudfront.net/embed/?s=unitedstamonsupm2&v=202303041002V20220312&d1=20130324&h=300&w=600 https://d3fy651gv2fhd3.cloudfront.net/embed/?s=unitedstamons... > has tunnel vision for workers’ rights Seems correct to me
- Aunche 3y ago
  Commodity market speculation is also caused by too much cheap money sloshing around with nothing productive to do, and the solution is still to increase interest rates. By the time central banks decided to raise interest rates, wage growth had already lagged behind inflation, so workers demanding higher wages is not enough to offset inflation.
  - lapcat 3y ago
    > Commodity market speculation is also caused by too much cheap money sloshing around with nothing productive to do, and the solution is still to increase interest rates. By the time central banks decided to raise interest rates That's a fair statement, but the timing is crucial, as you seem to note above, and the timing of the interest rate hikes is what the author is criticizing: "But as importantly, through lack of analysis, regulation, oversight and foresight - central bankers have shown this last week they were prepared to use high rates to risk and even precipitate bank failures and global financial instability. They have done so, and continue to do so by deliberately tightening monetary policy into heavily indebted economies, with falling real incomes. Economies that have still not fully recovered from both the GFC and the pandemic." "In other words, their effective preference is for class war over financial stability." "The big question central bankers must address is this: why did speculators and venture capitalists notice these imbalances while they and financial regulators did not?" > wage growth had already lagged behind inflation Wage growth almost always lags behind inflation, because it's much easier and quicker to raise the price of goods than for workers in general to demand and receive wage increases.
    - fundad 3y ago
      A lot of the money sloshing around started in 2017 with tax cuts and increased spending on DOD
eli_gottlieb 3y ago
>The most mainline Keynesian would say that inflation has many more causes that just wage growth. Yeah, but I don't think Summers and Rogoff are mainline Keynesians. They're Chicago School neoliberals, IIRC, and their training and career experience really has been within the ideology that inflation is a function of the bargaining power of labor and you purchase low inflation by wage repression.

lapcat 3y ago

> The author, in my mind, has tunnel vision for workers’ rights and wages, and won’t see the impacts of 6% inflation on the lives of that same working class. The very next paragraph after the one you quoted: "today’s inflation is caused by commodity market speculation, not wages. And if workers demand higher wages to deal with the inflationary impact of higher energy and other commodity prices - that is a consequence, not a cause of commodity price inflation"

Kalium 3y ago
Something can be both a consequence and a cause. That's how feedback loops work, and inflation is distinctly prone to feedback loops. Insisting that something is a consequence and therefore not a cause smells like politics being placed over rigor.
- lapcat 3y ago
  The author has analyzed this elsewhere, for example: https://annpettifor.substack.com/p/grain-inflation-starve-the-poor-feed https://annpettifor.substack.com/p/grain-inflation-starve-th...
- deleted 3y ago
  [deleted]
mjburgess 3y ago
So, absolutely nothing to do with the money supply? I mean, if it had to do with the money supply, then the fed is acting well to reduce it, right? https://d3fy651gv2fhd3.cloudfront.net/embed/?s=unitedstamonsupm2&v=202303041002V20220312&d1=20130324&h=300&w=600 https://d3fy651gv2fhd3.cloudfront.net/embed/?s=unitedstamons... > has tunnel vision for workers’ rights Seems correct to me
Aunche 3y ago
Commodity market speculation is also caused by too much cheap money sloshing around with nothing productive to do, and the solution is still to increase interest rates. By the time central banks decided to raise interest rates, wage growth had already lagged behind inflation, so workers demanding higher wages is not enough to offset inflation.
- lapcat 3y ago
  > Commodity market speculation is also caused by too much cheap money sloshing around with nothing productive to do, and the solution is still to increase interest rates. By the time central banks decided to raise interest rates That's a fair statement, but the timing is crucial, as you seem to note above, and the timing of the interest rate hikes is what the author is criticizing: "But as importantly, through lack of analysis, regulation, oversight and foresight - central bankers have shown this last week they were prepared to use high rates to risk and even precipitate bank failures and global financial instability. They have done so, and continue to do so by deliberately tightening monetary policy into heavily indebted economies, with falling real incomes. Economies that have still not fully recovered from both the GFC and the pandemic." "In other words, their effective preference is for class war over financial stability." "The big question central bankers must address is this: why did speculators and venture capitalists notice these imbalances while they and financial regulators did not?" > wage growth had already lagged behind inflation Wage growth almost always lags behind inflation, because it's much easier and quicker to raise the price of goods than for workers in general to demand and receive wage increases.
  - fundad 3y ago
    A lot of the money sloshing around started in 2017 with tax cuts and increased spending on DOD

eli_gottlieb 3y ago

>The most mainline Keynesian would say that inflation has many more causes that just wage growth. Yeah, but I don't think Summers and Rogoff are mainline Keynesians. They're Chicago School neoliberals, IIRC, and their training and career experience really has been within the ideology that inflation is a function of the bargaining power of labor and you purchase low inflation by wage repression.