Glorious Inflation News, Comrades! You’re Getting Poorer Slightly Less Quickly from https://pjmedia.com/vodkapundit/2022/08/10/glorious-inflation-news-comrades-youre-getting-poorer-slightly-less-quickly-n1619852n
Do you see what’s peculiar about celebrating a lower rate of inflation?
Also:
U.S. Labor Productivity Suffers Biggest Crash Ever Recorded, Labor Costs Soar Most Since 1982.
Definitely getting poor(er).
From Instapundit:
Fed committed to getting inflation to 2% target, Barkin says. “The Federal Reserve is committed to getting inflation under control and returning it to the U.S. central bank’s 2% target, Richmond Fed President Thomas Barkin said on Wednesday, the latest in a litany of policymakers voicing determination to rein in price increases running at the highest pace in four decades.”
Prices will already have moved up more than 10%. The price increase is permanent. You won’t get your purchasing power back when the inflation RATE goes down unless your income goes up at the same rate.
People are so trusting and so stupid.
From Kurt Schlichter:
“If you peasants can be convinced to settle for less, that would sure be convenient for our garbage ruling caste since it has proven itself utterly incapable of even marginal performance in achieving merely the bare minimum standards of its job. Do you have security? How about prosperity? Does the future look bright? No.”
People are beginning to notice. It took only 700 years to get back to where they were after the Roman Empire had fallen. The elites never noticed a thing.
And after a while no one else will notice either.
Source: Townhall Everything Is Worse and You Are Just Supposed
to Take It
No one any longer knows now a market economy works. How a necessary feature is a private sector setting prices process. Without that the market will not function. It cannot be run by governments.
Why that is can be found almost in my book alone:
Also from Mises and Hayek but you have to read them closely.
We are about to bring the market economy to an end and no one will be able to bring it back.
I keep looking for someone else to point it out but no one does so I will.
If prices go up unless they fall by the same amount at some stage in the near future, you are forever behind unless your income goes up by the same percent.
Suppose prices go up by 6% and then the inflation rate goes to zero you are forever behind by 6%. Isn’t that clear?
Let me repeat in a slightly different way. If the inflation rate goes to zero you are still that 6% out until your income rises by that same 6%.
Those in government are stealing our wealth and we are apparently too stupid to notice.
No one seems able to distinguish between a level, such as GDP, and a rate, like inflation. We really are a stupid bunch. Even if inflation goes to zero percent we must remain behind.
Promising a return to zero inflation leaves most of us behind.
Higher interest rates make the robbery permanent.
Recessions are supposedly two consecutive quarters of falling GDP. So the US is in a technical recession.
But you can tell a real recession by negative real wages. We have been reducing real wages since the “pandemic” began.
Public spending does not count.
And with inflation through the roof almost everyone will notice,
They cut value adding production and increase public spending and then are surprised by inflation. Stupid and ignorant doesn’t cover it.
I keep pointing out that the last person you should listen to about economic policy is anyone who has had a modern education in economic theory. Here is a bit of proof, from today’s Oz: Dismay at RBA as wages growth goes backwards. Here is the opening line of the article:
The person most disappointed with Wednesday’s sluggish wages growth figure is surely the Reserve Bank Governor. Real wages are now going backwards at 2.7 per cent.
How would it even have been possible for real wages to rise while the country has been in lockdown, our future sources of energy are under threat, government spending has risen at every turn, and while real interest rates are in negative territory?
Real wages can only grow if the flow of goods and services that wage earners can buy is rising. This can, of course, only happen if the private sector is expanding.
It is the proliferation of all these Keynesians who believe that increases in public sector spending on useless junk will somehow “stimulate demand” and therefore lead to a higher level of productive enterprise.
That is, these people believe that if governments waste our available resources and capital on unproductive projects of their choosing that when their overpaid virtually entirely unproductive public servants spend the wages they receive that this will propel the economy forward.
It does sicken me to watch all this in action since I can see how not only almost everyone else but also I too will have to experience a fall in my real level of income because of all this.
That central banks around the world seem to believe that negative real rates of interest are a stimulus to growth is just how it is. If you would like to be cured of this absurdity, the only place I can think to send you is to Chapter 17 of the third edition of my Free Market Economics: An Introduction for the General Reader which is titled, “Saving and the Financial System”. There are other books as well, but virtually all of them were written at least a century ago.
It is maddening to watch our economy trashed by such ignorance, but there you have it.
FROM THE COMMENTS on the same post at New Catallaxy: I try not to do this, and hardly do it at all, but this was the sole comment which to me really demands a response since I think it is so instructive. From Hubris:
I read these tirades. Do you essentially advocate a return to industrial protection and supply? It seems like you just don’t like markets.
I know I am beating my head against a brick wall, but massive levels of public spending, enormous unfunded fiscal deficits and adjustment of market rates of interest by central banks are not in any sense leaving things to the market. Why is that not utterly obvious?
Increases in the price level (nowadays referred to as “inflation”) are embedding themselves across much of the world. And I would like to emphasise that it’s not just a money-supply thing. It is essentially caused by the growth of purchasing power relative to the growth in the amount of goods and services available for purchase. The key element is productivity growth relative to the level of spending.
I’m not interested in dwelling on any of this, other than to point out that getting inflation back down to zero hardly fixes the problem. Here are the latest data from the ABS:
Suppose the growth rate went down to zero from 5.1%, which it won’t any time soon, if ever. Since the CPI figure is a percentage change in the index you have not recovered your lost purchasing power.
Most extraordinarily to me, the ABS only just mentions the latest index number, which is 123.9. The publication, so far as I could see, doesn’t even mention the index level a year ago which I calculate to have been 117.9.
The point: unless the Index falls back to 117.9, a zero inflation rate still leaves you 5.1% behind.
It is people on fixed incomes who will be really punished, but everyone who has not had their incomes rise by that 5.1% will be financially worse off.
So we now have all the ingredients of a wage-price spiral. This is what Labor has promised: ‘Absolutely’: Albanese backs wage growth at rate of inflation.
“I believe the minimum wage should at least keep up with the cost of living,” Albanese told a press conference in the Melbourne seat of Chisholm on Tuesday morning.
Productivity has fallen backwards since the lockdowns and the covid restrictions. Governments everywhere – see Victoria specially – have thrown away billions of dollars on useless unproductive projects. (The US has gone absolutely insane.)
Put in place a system that adjusts wages to the movement in prices and the disaster that will follow will still be with us twenty years from now.
Law of Markets 