[noemon]

Banks need to write the debt off, austerity doesn't usually work.

Banks may do so, but central banks do not do so.

Cutting public employee wages, pensions and benefits works to raise money when you have no other avenue to raise money. Just like businesses sack staff when they are in dire straits.

Nobody likes it, but it is much preferable to printing money and causing inflation for everybody.

If it is between cutting them by 5-10% and 10% inflation for everybody, one has to be functionally insane to choose inflation.

[noemon]

Incorrect, and, as usual, the article in the OP is nonsense. You DO NOT need to raise taxes to control inflation. That would only be necessary if the economy was already at full employment (and you want to spend even more money for some reason), which it wasn't during the pandemic and it sure as hell isn't now.

The proper way to deal with inflation is to increase wages, but try getting that shit past congress.

Tl;dr : MMT works just fine, that's why the corpos will stop it at any cost.

Increasing wages creates more inflation. It is not possible to match or surpass wages to inflation, it never has been. It's like trying to fill up a bottle of water that has no bottom end.

The UK is at full employment and the US is at full employment also. Both UK & US official unemployment rates stand at 3-4%, structural unemployment accounts for at least 3% which means that real unemployment is below 1% and could possibly even be in the negative where it definitely is today in the UK.

My personal view is that economies should maintain an unemployment rate of no less than 6%. Anything below that starts causing serious issues to an economy, overheating, labor market losing its elasticity causing crystallisations in various sectors, house prices shoot up, debt and mortgage levels go to the extreme, it pushes all the indicators on red territory even the good ones and foments bubbles/crystals to form. Economies like cars should not be run at high rev red territory with all cylinders fired up, they can only cope temporarily and not sustainably.

There are only 2 ways to deal with inflation, higher interest rates to restrict the money supply and higher taxes for everyone to reduce demand for goods and services. Either one or both in tandem.

My opinion is that higher interest rates are preferable to higher taxes because they hit the ones in debt and reward savers while higher taxes hit productive sectors of the economy.

[Saeko]

Increasing wages creates more inflation. It is not possible to match or surpass wages to inflation, it never has been. It's like trying to fill up a bottle of water that has no bottom end.

Think carefully about what you just said here. What happens in an economy with inflation but where wages remain constant?

[noemon]

What happens in an economy with inflation but where wages remain constant?

Wages do not remain constant in an economy with high inflation. They rise but never to cover the distance of overall inflation because other things rise as well creating a spiral. No way out of a spiral and no way of catching up to it with wages when the inflation mix contains so much more in it.

Inflation measures the rise of costs, wages being a part of that. Of course different rules apply to different sectors, some sectors rising more than others but inflation looks at overall costs all over the totality of the economy. So 10% inflation could mean 200% rise in energy costs like it does today in the UK, it could also mean 50% increase of wages for some sectors or negative for other sectors.

Today's inflation is part QE gone mental, part Biden gone mental and handing over some trillions the past couple of years and part Russia's invasion pushing energy prices up and part global supply chain issues pushing various basic commodity prices up.

[Saeko]

Wages do not remain constant in an economy with high inflation.

Nominal wages, maybe, maybe not. But what about the real wage?

[noemon]

Nominal wages, maybe, maybe not. But what about the real wage?

Real wages overall always below inflation.

Some sectors may beat it and by a lot, but not possible for all sectors to beat inflation. It is not possible for wages to beat inflation.

Not even in communist, fascist and authoritarian states with full control of everything.

Because wage increases push inflation further up, they push prices further up, and this cycle cannot be beaten because wage rises themselves are part of the inflationary causes. It is like arguing that a subset can be greater than a set. It cannot be.

[Saeko]

Real wages overall always below inflation.

Some sectors may beat it and by a lot, but not possible for all sectors to beat inflation. It is not possible for wages to beat inflation.

Not even in communist, fascist and authoritarian states with full control of everything.

Okay, and what happens to sectors that can't beat inflation?

Because wage increases push inflation further up, they push prices further up, and this cycle cannot be beaten because wage rises themselves are part of the inflationary causes.

Is inflation some mystical force that increases prices?

It is like arguing that a subset can be greater than a set. It cannot be.

ACKSHUALLY... There are actual set theories out there where the proposition "every subset of a finite set is finite" is not a theorem. This means that you can have consistent set theories where some finite set has an infinite subset.

[noemon]

Okay, and what happens to sectors that can't beat inflation?

They suffer and that is why inflation must be tamed. There is only one way to tame inflation, the quick and easy way(through interest rates targetting the very same QE that caused the inflation in the first place) or the long and hard(through taxes, socializing inflation).

Is inflation some mystical force that increases prices?

No, it is merely the measure of the price increase itself.

ACKSHUALLY... There are actual set theories out there where the proposition "every subset of a finite set is finite" is not a theorem. This means that you can have consistent set theories where some finite set has an infinite subset.

I expected that from you and thought about it also but as we both know and understand this does not apply to goods, services & people on the market.

[ingliz]

you stimulate growth by reducing taxes

Cutting taxes for the rich does not work as they just trouser the money, and no one benefits.

Cutting taxes for the poor is a waste of time as a pound or two in the pocket of the minimum-waged is not going to kick-start growth.

No, the government should spend its way out of a recession.

A virtuous circle:

Spending your way out of a recession may seem counterintuitive but the money spent goes around and around. A country is not a household. Spend it on improving infrastructure (not HS2) and public services, welfare too, and that money goes around to those who would spend it - the relatively poor - not those who would squirrel it away.

[JohnRawls]

Okay, and what happens to sectors that can't beat inflation?



Is inflation some mystical force that increases prices?



ACKSHUALLY... There are actual set theories out there where the proposition "every subset of a finite set is finite" is not a theorem. This means that you can have consistent set theories where some finite set has an infinite subset.

I hate to tell you this but Noemon is right. Anything that we produce, consume/buy, earn wages etc is relevant to the supply and demand curves. Irrelevant of any political or philosophical meaning behind it and will equal out. This is also not depepndant on your government type or structure be you capitalist or communist or dictatorial or tribal or whatever. It is the law of nature of some sort.

The TLDR of this for me, is that under capitalism we will never have perfect earning gap and easier work will always be paid less than harder work.(Define harder or easier however you want) So the wage gap will always remain. Even if you try to push it somehow through political means then the other sides will equalise by the looks of it so even if you want to increase everyone salaries to 1 000 000 then bread will also cost more to compensate for whatever you increased the wage to both because of production issues and people willing to pay it. Wages/income is a means in itself and not the end.

If you want better standard of living then the only choice is to increase supply to the point that anything is dirt cheap. Better methods of production, better productivity, automate everything you can see hence why globalisation is both misunderstood and is a cheat of sorts for high income countries. And we have achieved great success in this fields, for example in food supply if you compare it to a century or two ago. This is also why banks and financial markets ARE FUCKING CRUCIAL and should exist. They allow all of this to happen much faster than without them by 100 fold.

The difference between many ideologies is that they try to hide behind moral, immoral and so on arguments and capitalism takes it as it is. Capitalism is more scientific and brutal at its heart than communism is what I am trying to say.

[ingliz]

Edit:

... and that money goes around to those who would spend it in their local economy - the relatively poor - not those who would squirrel it away.

[Saeko]

They suffer and that is why inflation must be tamed.

In what way do they suffer?

No, it is merely the measure of the price increase itself.

So inflation does not cause prices to increase, it just is the price increase?

I expected that from you and thought about it also but as we both know and understand this does not apply to goods, services & people on the market.

[Saeko]

I hate to tell you this but Noemon is right. Anything that we produce, consume/buy, earn wages etc is relevant to the supply and demand curves.

Can you explain how the demand curve is calculated?

[Unthinking Majority]

1] Yes, AFAIK prices would increase. But who would care? The poor erased their debts and the rich got richer by sucking up all the money.
.

Well at least if they took money from the rich and gave it to the poor it would be based on actual wealth that exists rather than creating money from thin air and pumping it into the economy. I would assume the former would cause less inflation, though it would still occur at some level.

[ckaihatsu]

Why did the Soviet Union collapse?

1970–1990

Further information: Era of Stagnation, History of the Soviet Union (1964–1982), and History of the Soviet Union (1982–1991)

The value of all consumer goods manufactured in 1972 in retail prices was about 118 billion roubles ($530 billion).[64] The Era of Stagnation in the mid-1970s was triggered by the Nixon Shock and aggravated by the war in Afghanistan in 1979 and led to a period of economic standstill between 1979 and 1985. Soviet military buildup at the expense of domestic development kept the Soviet Union's GDP at the same level during the first half of the 1980s.[65] The Soviet planned economy was not structured to respond adequately to the demands of the complex modern economy it had helped to forge. The massive quantities of goods produced often did not meet the needs or tastes of consumers.[66]

The volume of decisions facing planners in Moscow became overwhelming. The cumbersome procedures for bureaucratic administration foreclosed the free communication and flexible response required at the enterprise level for dealing with worker alienation, innovation, customers, and suppliers. During 1975–1985, corruption and data fiddling became common practice among bureaucracy to report satisfied targets and quotas thus entrenching the crisis. At the same time, the effects of the central planning were progressively distorted due to the rapid growth of the second economy in the Soviet Union.[25]

https://en.wikipedia.org/wiki/Economy_o ... %80%931990

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tax rate that can increase to suck up the excess money to bring inflation down

This is a *misnomer* -- as though inflation is linked to money supply, instead of to the actual balance of supply-and-demand. That's why raising the interest rate is asinine because it's *already* causing the expected liquidity crunch (here in 2022).

No one wants that. Not people, not corporations.

This, unfortunately, is *vague* -- it's grouping 'people' and 'corporations', as *consumers*, economically, while ignoring that people-as-*workers* have *different* interests in the economy than people-as-consumers.

Also, this is private-sector vs. public-sector -- the *public sector* / government / 'public' has a *direct* interest in increased tax rates, as for taxing wealth and capital gains, for the sake of providing humane government social services that benefit *individual persons themselves*.


Social Production Worldview

Spoiler: show

[2] G.U.T.S.U.C., Simplified

Spoiler: show

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No mainstream econ. theory saw that ending the gold standard was a big deal. IMHO, this was because the rich didn't want the theories changed.

Obviously the 'unchanged' 'theory' here is that of *private property*. To private *ownership* the transition from slave labor to free-labor wasn't really that big a deal, because the process of *material exploitation* still takes place, at the expense of *wage labor* -- just some *legalistic* changes, arguably.


labor and capital, side-by-side

Spoiler: show

material-economic exploitation

Spoiler: show

Spoiler: show

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the rich

Note that the international powers just work-it-out among themselves, at the *currency* / exchange-rates economic level, to forestall any problematic economic / geopolitical issues:

The Plaza Accord was a joint–agreement signed on September 22, 1985, at the Plaza Hotel in New York City, between France, West Germany, Japan, the United Kingdom, and the United States, to depreciate the U.S. dollar in relation to the French franc, the German Deutsche Mark, the Japanese yen and the British Pound sterling by intervening in currency markets. The U.S. dollar depreciated significantly from the time of the agreement until it was replaced by the Louvre Accord in 1987.[1][2][3] Some commentators believe the Plaza Accord contributed to the Japanese asset price bubble of the late 1980s.[4][5][6]

https://en.wikipedia.org/wiki/Plaza_Accord

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the apparent need tax increases to fight inflation in some rare situations.

Which makes the Tories' initial action all the more bizarre and inappropriate, economically-speaking:

In one fell swoop, Kwarteng reversed a rise in corporation tax planned by the government of Boris Johnson, whom Prime Minister Liz Truss replaced just 17 days ago. He announced, “The UK’s corporate tax rate will not rise to 25 percent—it will remain at 19 percent. We will have the lowest rate of Corporation Tax in the G20.” This will save the corporations “almost £19 billion a year” the chancellor said.

https://www.wsws.org/en/articles/2022/0 ... l-s23.html

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UBI payments

UBI, if favored *over* government / public-sector social services, then only serves to preserve the *private sector*, and private sector interests.

UBI payments that can and will be cut to fight inflation in those rare cases.

You've just *abandoned* MMT here, and are now promising *austerity*. (This treatment implicitly acknowledges that inflation results from supply-and-demand, and *not* from money-supply.)

Please try to understand that MS Econ. asserts that it can regulate the economy by changing interest rates. This is just playing around with money,

So which *is* it, Steve -- is the money-supply *important*, or isn't it -- ?

Remember *this* -- ?

No mainstream econ. theory saw that ending the gold standard was a big deal. IMHO, this was because the rich didn't want the theories changed.

If the key 'index-value' valuation (gold, etc.), and its corresponding money-supply (volume / quantity) wasn't such a big-deal / transition, to the wealthiest at the time, then why are we fussing over it *now* -- ?


And:

MMTers assert that the history of the economy doesn't actually support the idea that as the money supply increases the value of the money decreases, because the effect is not in anyway consistent.

The terrain of economic functioning is far too complex for *anyone* to safely say that simply increasing the money supply causes inflation.

[JohnRawls]

Can you explain how the demand curve is calculated?

Now that is the harder question. While economists have their theories on it may be even divided between different categories of products, I sort of look at it in a way that people will consume something until their needs are fully met to the brim and they just don't need the product and the limiting factor is obviously money with some things being higher on the priority scale if we talk about it in general. Let us take bread as an example, you won't realistically buy bread endlessly as a person to eat it endlessly. There is a limit at how much you would eat it until you get sick and tired of it. Same would apply for a car, yes there are different brands but after you buy 1 then people are usually good for some time with exceptions.

So if we want higher standards of living in general, the only realistic way to do it is to make every product dirt cheap so people could consume it until well, they don't need to consume it anymore. This actually applies to services also like healthcare or whatever it might be. You don't realistically need 10 eye surgery if one does the trick and so on.

It kinda tackles your problem of living standards and wage gaps just from the other side in my opinion. But then again, is it truly realistic to make all products dirt cheap? I mean, may be. We had a lot of luxury products in the past that only rich could buy and now it is available to everyone at a dirt cheap price in most Western countries. So I am not sure, what could stop us from making the current luxury products not a luxury anymore.

I find the general idea that everyone can earn above a certain very comfortable threshold a bit unrealistic as I said since the amount of goods and services would remain the same so people would logically just pay more for those services since they wanna get them in the first place. Basically it would change nothing even if we enforce it somehow.

[ckaihatsu]

Now that is the harder question. While economists have their theories on it may be even divided between different categories of products, I sort of look at it in a way that people will consume something until their needs are fully met to the brim and they just don't need the product and the limiting factor is obviously money with some things being higher on the priority scale if we talk about it in general. Let us take bread as an example, you won't realistically buy bread endlessly as a person to eat it endlessly. There is a limit at how much you would eat it until you get sick and tired of it. Same would apply for a car, yes there are different brands but after you buy 1 then people are usually good for some time with exceptions.

So if we want higher standards of living in general, the only realistic way to do it is to make every product dirt cheap so people could consume it until well, they don't need to consume it anymore. This actually applies to services also like healthcare or whatever it might be. You don't realistically need 10 eye surgery if one does the trick and so on.

It kinda tackles your problem of living standards and wage gaps just from the other side in my opinion. But then again, is it truly realistic to make all products dirt cheap? I mean, may be. We had a lot of luxury products in the past that only rich could buy and now it is available to everyone at a dirt cheap price in most Western countries. So I am not sure, what could stop us from making the current luxury products not a luxury anymore.

I find the general idea that everyone can earn above a certain very comfortable threshold a bit unrealistic as I said since the amount of goods and services would remain the same so people would logically just pay more for those services since they wanna get them in the first place. Basically it would change nothing even if we enforce it somehow.

'Higher standards of living' isn't really a concern for *politics*. If those of the private sector, now or ever, could provide something *artisanal* / 'semi-rare' (my terming) (luxury / specialty) to someone, and/or in-person ('pink-collar') services, in some *customized* / personalized way, then they should go-ahead and *do* that.

Politics has to do with the necessarily-common, like the oft-mentioned 'natural monopolies'. The far-left just extends that hands-on governmental regulation idea all the way to nationalizing *all* factories / workplaces, to then be handed over to the proletariat.


Multi-Tiered System of Productive and Consumptive Zones for a Post-Capitalist Political Economy

Spoiler: show

[noemon]

In what way do they suffer?

Their purchasing power drops massively.

So inflation does not cause prices to increase, it just is the price increase?

The chicken and the egg is irrelevant with inflation, you can look at it however you prefer.

Price increases in basic commodities has a knock-on effect for other prices to increase and cause a domino effect. Wages themselves are part of those prices that increase that cause other prices to increase. The average sum of all those price increases we measure on various baskets and these are measured measuredly. The official rate of inflation is definitely several orders lower than the actual total inflation happening all around us. 9% of CPI is more like 17%+ RPI and 4% CPI is more like 11% RPI, which means that with 17% RPI you are looking at 30%+ of actual inflation.

[JohnRawls]

'Higher standards of living' isn't really a concern for *politics*. If those of the private sector, now or ever, could provide something *artisanal* / 'semi-rare' (my terming) (luxury / specialty) to someone, and/or in-person ('pink-collar') services, in some *customized* / personalized way, then they should go-ahead and *do* that.

Politics has to do with the necessarily-common, like the oft-mentioned 'natural monopolies'. The far-left just extends that hands-on governmental regulation idea all the way to nationalizing *all* factories / workplaces, to then be handed over to the proletariat.


Multi-Tiered System of Productive and Consumptive Zones for a Post-Capitalist Political Economy

Spoiler: show

Indeed they aren't for Communist countries since leaders are not elected and whos position is based on coersion, threat of violence and propaganda. For the Liberal Democracies it is a bit more complicated since this process is slow but it works due to a functioning banking and financial sectors. The government are caretakers but not the guides for the whole process.

[Rancid]

This, unfortunately, is *vague* -- it's grouping 'people' and 'corporations', as *consumers*, economically, while ignoring that people-as-*workers* have *different* interests in the economy than people-as-consumers.

Go take a poll that asks "Do you want your income tax rate to change every week?"

Let's see how many people say yes...