News
Welcome to the News community!
Rules:
1. Be civil
Attack the argument, not the person. No racism/sexism/bigotry. Good faith argumentation only. This includes accusing another user of being a bot or paid actor. Trolling is uncivil and is grounds for removal and/or a community ban. Do not respond to rule-breaking content; report it and move on.
2. All posts should contain a source (url) that is as reliable and unbiased as possible and must only contain one link.
Obvious biased sources will be removed at the mods’ discretion. Supporting links can be added in comments or posted separately but not to the post body. Sources may be checked for reliability using Wikipedia, MBFC, AdFontes, GroundNews, etc.
3. No bots, spam or self-promotion.
Only approved bots, which follow the guidelines for bots set by the instance, are allowed.
4. Post titles should be the same as the article used as source. Clickbait titles may be removed.
Posts which titles don’t match the source may be removed. If the site changed their headline, we may ask you to update the post title. Clickbait titles use hyperbolic language and do not accurately describe the article content. When necessary, post titles may be edited, clearly marked with [brackets], but may never be used to editorialize or comment on the content.
5. Only recent news is allowed.
Posts must be news from the most recent 30 days.
6. All posts must be news articles.
No opinion pieces, Listicles, editorials, videos, blogs, press releases, or celebrity gossip will be allowed. All posts will be judged on a case-by-case basis. Mods may use discretion to pre-approve videos or press releases from highly credible sources that provide unique, newsworthy content not available or possible in another format.
7. No duplicate posts.
If an article has already been posted, it will be removed. Different articles reporting on the same subject are permitted. If the post that matches your post is very old, we refer you to rule 5.
8. Misinformation is prohibited.
Misinformation / propaganda is strictly prohibited. Any comment or post containing or linking to misinformation will be removed. If you feel that your post has been removed in error, credible sources must be provided.
9. No link shorteners or news aggregators.
All posts must link to original article sources. You may include archival links in the post description. News aggregators such as Yahoo, Google, Hacker News, etc. should be avoided in favor of the original source link. Newswire services such as AP, Reuters, or AFP, are frequently republished and may be shared from other credible sources.
10. Don't copy entire article in your post body
For copyright reasons, you are not allowed to copy an entire article into your post body. This is an instance wide rule, that is strictly enforced in this community.
view the rest of the comments
Your description of how things should work, is pretty dang close to how they do work. You say inflation should not be a problem under MMT, yet it clearly is. We are suffering a global period of persistent high inflation.
Care to share your thoughts on why such high persistent inflation is everywhere if not due to the ever expanding money supply?
The "high persistent" US inflation rate is currently 2.4%. Having lived in places with actual high inflation, I question your premise.
There's no denying that inflation is persistent, and that's by design. Because money is created through debt, and the debt has to be paid back at interest, there's no way that would be possible without persistent inflation. Hence why the Fed has an annual inflation target of 2% (which is admittedly completely arbitrary).
But the real driver of inflation is simply supply and demand. Prices go up when there is greater demand for products and services than there is supply of products and services to meet that demand. Disruptions to the global supply chain during the pandemic led to a supply demand imbalance and thus higher inflation. Trump's tariffs have contributed to a recent higher than target inflation, as well.
However, there are also systemic problems that have contributed to higher inflation, and they come down to US capitalism just generally failing.
Capitalists want to invest their capital where they think they will make the highest profit and get the highest possible return on their investment. The theory is that this should result in capital flowing to productive endeavors that generate a sufficient supply of the goods and services that are most in demand, but that doesn't necessarily happen. Capitalists aren't in the business of meeting consumer demand, they're in the business of maximizing their profits, and often those two things are incongruous. And that's why it's so hard to keep inflation under control. Domestic producers are simply not producing enough of the goods and services to meet demand, because doing so just isn't profitable enough for them, and that's creating an imbalance, where demand constantly outpaces supply, causing prices to go up too fast.
The Fed could address this by raising rates, tightening the money supply, reducing demand and causing a recession. That's one way, but almost no one wants that. The other, better way to address higher than target inflation is to get the damn greedy capitalists to stop prioritizing their own maximum profits and start producing the quality, affordable products and services that people actually want.
We were able to mask many of the negative impacts of greedy capitalists running everything for some decades thanks to globalization. We couldn't get our capitalist scumbags to produce enough quality, affordable products and services domestically to meet domestic consumer demand, because doing so wasn't profitable enough for them, so we let them go overseas to produce stuff, where taxes were lower, regulations were minimal, and the workers were extremely poor and thus dirt cheap. That worked for a while. It made it possible for some things to remain relatively affordable, even get much cheaper in some cases, while maximizing profits for the greedy scumbug capitalists. But, globalization was a one time deal, and it came with its own problems, so now there's a big push to reshore a lot of our production. But the greedy scumbug capitalists won't produce domestically because they can't make the profits they want making products and services people want to buy at prices people want to pay. So there just isn't enough domestic supply being produced to meet demand.
An example would be cars. Making low margin, affordable mass market vehicles just isn't profitable enough for the greedy scumbug capitalists, even if it is what most consumers want, so instead they make higher margin, lower volume luxury vehicles. This has driven up the average cost of vehicles.
Inflation will remain persistently high so long as the supply of affordable products and services is insufficient to meet consumer demand.
Even leaving out the exploitation, there will always be goods and services that it's more economical to import than to produce locally. Attempts at autarky always fail.
Almost everyone wants more than they can afford. That's probably constant, and is probably a consequence of human nature. But inflation isn't constant. So I don't buy that explanation.
I'm not necessarily advocating for total reshoring. I don't think it's necessary. However, as I said, globalization led to its own problems. We saw during the pandemic how fragile complex global supply chains can be. Plus, there's a certain amount of autonomy lost when a country is dependent on another country for some vital resource or product. That's a great way for an independent country to become a vassal state.
You are clearly unfamiliar with Japan in the 90s. Despite falling prices, Japanese consumers didn't go out and spend mindlessly. They saved, causing prolonged deflation. It got so bad they had to make savings rates negative to try and get people to spend the money the government was printing instead of saving it.
Insatiable consumption is a cultural thing, not necessarily "human nature." Here in the US where I am, the culture of endless consumption has been carefully, deliberately cultivated over generations. Here, if you put money in someone's hands, generally they will spend it, that's true, not save it like the Japanese did. But clearly not every country is like the US.
And not every person is that way, either. Here in the US there are people who aren't so loose with their money. Or at least there were. My grandparents lived through the Great depression and they were quite thrifty, regardless of what the Federal Reserve's policies were at any given time.
But it isn't just my explanation. That's just how it works. Supply and demand determines price. Prices go up when demand outpaces supply. The amount of money in the money supply can influence that, because, as we've established, under many circumstances at least, if people have money to spend they will try to spend it. But central banks rarely just print money and hand it to people. When they do, yeah, that can definitely be a recipe for runaway inflation.
Love it! Well said.
I'm not an expert but I think you have "inflation" and "price increases" confused, the difference matters here, inflation is headed back to normal but prices are remaining up
"Remaining up" is not the same as "still increasing."
No confusion here. I believe central banks, responsible for inflation are also prone to "creative accounting" and narrative adjustments to wash away the guilt and blame for their failures. It's not any different than the police investigating themselves and unsurprisingly finding nothing wrong.
The basket of goods is cherry picked, the methodology is dubious at best, frequently taking reasonable economic assumptions and abusing them beyond legitimacy. You can't put that much power in the hands of people and not expect corruption.
At my most generous, our current measure of inflation doesn't measure what people think it does, yet we use it every day as if it did like COLA riders. The suitability of inflation calculations and the applications is a sprawling topic for another post at another time.