3 ms·

> The vice angle is that when inflation increases faster than wage work, people switch from a longer term wage, to selling what they can negotiate spot prices f

by mo_42 3y ago

> The vice angle is that when inflation increases faster than wage work, people switch from a longer term wage, to selling what they can negotiate spot prices for to keep up with inflation This sounds a bit confusing. Does an increase of inflation mean the rate of price changes goes from 2% to 4% p.a. or is it an increase of prices? Then, what does it mean that inflation increases faster than wage work? I can only imagine that it means that prices increase faster than productivity. But even this doesn't necessarily imply inflation. For economists, inflation has a specific meaning that's slightly different than what people usually think (e.g. [0]). > Wiemar was the complete destruction of a social fabric under reparations and inflation, and the vice businesses that sprung up as people switched from regular wages to survive caused the social reaction that produced the second world war. Hyperinflation of the Weimar Repulic did not directly cause WWII. Hyperinflation was in the early 1920ies. The final rise of the NSDAP and the election of Hitler as chancellor is attributed more to the misery of the Great Depression beginning at the end of the end of the 1920ies. Although, one can also argue that the overall instability of the Weimar Republic helped this party in gaining votes. [0] https://www.clevelandfed.org/publications/economic-commentary/2008/ec-20080601-rising-relative-prices-or-inflation-why-knowing-the-difference-matters https://www.clevelandfed.org/publications/economic-commentar...

motohagiography 3y ago
I suspect the confusion is indeed yours. From the fed link: > Strictly speaking, inflation refers only to a drop in the purchasing power of money that results when a central bank creates more money than its public wants to hold. Inflation manifests itself as a rise in all prices and wages—not just some subset of prices. When you debase the purchasing power of the currency, you get demand bubbles for goods as people get out of depleted/inflated cash. This causes the staple goods price increases that cause desperation. Fuel taxes to pay down the debt the state accrues also causes a similar desperation via price inflation today. What kind of chaff argument is trying to confuse the issue with the rate of change and the net change? If you want to lie to people and tell them that inflation and MMT will be good for them so they do nothing while their society is demolished, this makes sense, but otherwise, it's dishonest. The Wiemar era humiliated a generation of Germans who became cruel and gravitated to NSDAP (and its precursors) as the result. A decade is a short time in culture. People in 2023 remember 2013 very clearly, as those in 1933 did of 1923.
- taliesinb 3y ago
  I've been reading up on MMT recently, and I haven't seen adherents (e.g. Mosler) claim that inflation is good. They do provide a heterodox account of how government spending leads to inflation, a sectoral one that focuses on demand from the public sector outbidding the private sector in areas were the economy is already at or near productive capacity. And they claim the traditional examples of hyperinflation e.g. Weimar are adequately explained by supply-side constraints. They also explain why austerity has been such an abject failure over the last 13 years in the UK.
  - hellojesus 3y ago
    MMT ia utter garbage. It's wishful thinking rationalized by people looking at the current debt burdens and saying, "If things haven't broken under the current stress, the bifurcation point must be higher, and maybe so high indeed as to not be applicable." The US is in an extremely privileged position in that it is the world's reserve currency, so most of the ill effects from QE haven't spilled into everyday products. At least until recently. Mostly it impacted speculative assets such as crypto, equities, and real estate. Now it's starting to hit other sectors, jumpstarted by the supply side constraints introduced in covid. The US is able to print dollars and exchange them for real goods. No other country can do that. But once foreign countries stop buyung treasuries and start demanding goods for goods instead of devalued dollars for goods, thr US won't have any goods to trade, and the MMG hypothesis will die with instant hyperinflation drovenby extraordinary supply side shocks to the US economy.

by mo_42 3y ago

motohagiography 3y ago

I suspect the confusion is indeed yours. From the fed link: > Strictly speaking, inflation refers only to a drop in the purchasing power of money that results when a central bank creates more money than its public wants to hold. Inflation manifests itself as a rise in all prices and wages—not just some subset of prices. When you debase the purchasing power of the currency, you get demand bubbles for goods as people get out of depleted/inflated cash. This causes the staple goods price increases that cause desperation. Fuel taxes to pay down the debt the state accrues also causes a similar desperation via price inflation today. What kind of chaff argument is trying to confuse the issue with the rate of change and the net change? If you want to lie to people and tell them that inflation and MMT will be good for them so they do nothing while their society is demolished, this makes sense, but otherwise, it's dishonest. The Wiemar era humiliated a generation of Germans who became cruel and gravitated to NSDAP (and its precursors) as the result. A decade is a short time in culture. People in 2023 remember 2013 very clearly, as those in 1933 did of 1923.

taliesinb 3y ago
I've been reading up on MMT recently, and I haven't seen adherents (e.g. Mosler) claim that inflation is good. They do provide a heterodox account of how government spending leads to inflation, a sectoral one that focuses on demand from the public sector outbidding the private sector in areas were the economy is already at or near productive capacity. And they claim the traditional examples of hyperinflation e.g. Weimar are adequately explained by supply-side constraints. They also explain why austerity has been such an abject failure over the last 13 years in the UK.
- hellojesus 3y ago
  MMT ia utter garbage. It's wishful thinking rationalized by people looking at the current debt burdens and saying, "If things haven't broken under the current stress, the bifurcation point must be higher, and maybe so high indeed as to not be applicable." The US is in an extremely privileged position in that it is the world's reserve currency, so most of the ill effects from QE haven't spilled into everyday products. At least until recently. Mostly it impacted speculative assets such as crypto, equities, and real estate. Now it's starting to hit other sectors, jumpstarted by the supply side constraints introduced in covid. The US is able to print dollars and exchange them for real goods. No other country can do that. But once foreign countries stop buyung treasuries and start demanding goods for goods instead of devalued dollars for goods, thr US won't have any goods to trade, and the MMG hypothesis will die with instant hyperinflation drovenby extraordinary supply side shocks to the US economy.