As soon as you start to think the claim through, it falls apart. But it's taken as scientific fact across the political spectrum. That needs to change.
"White House Senior Trade Counselor-designate Peter Navarro: “We put on significant tariffs on China, steel, aluminum, dishwashers, solar, a lot of increased countervailing duties to stop the dumping [in Trump’s first administration]. We had zero inflation from any of that. It never happened, and it’s the same movie this time."
The biggest problem with this argument is that he's wrong. There were three inflation spikes during Trump's administration, from ~1.5% to ~2.5%, and there almost certainly would have been another if not for Covid. And there were clear policy reasons for them (tariffs, tax cuts and pressuring the Fed to keep rates low); they were not random fluctuation.
Now Trump wants to implement bigger versions of all those policies - one would expect bigger inflation spikes. And if inflation spikes lead to higher inflation EXPECTATIONS then you can really get in trouble, as people start demanding bigger raises and companies schedule price increases more aggressively, and the inflation feeds on itself, as it did in the 1970s.
Nobody noticed the spikes in 2017-2019 because inflation has to get above a certain amount before anybody notices. That's why so many people think there was no inflation for decades before 2020, and why so many people seemed to be comparing 2022 prices to 2010 prices. ["My grocery bill doubled under Biden!" F---ing no, it didn't.]
"Inflation is a sign something is wrong that needs to be addressed - very likely high debt levels, and too much ownership and income in too few hands, so people outside that privileged group have fewer and fewer opportunities."
I mean, that is something that creates inflationary pressure, but I think the inflation of 2022-2023 can be explained pretty easily by half the people in the world not going to work for six months.
What is really interesting is that because the inflation had different causes than historical inflation, it most likely had a different solution. Which is to say, the Fed raising interest rates was not what caused disinflation. Inflation was going to come down because of normal market forces; all the rate hikes did was f--- over Biden.
And because there is so much private debt, raising rates didn't even decrease EFFECTIVE inflation that much, because of higher debt payments! Those are NOT factored into CPI.
What they did was so textbook I have a hard time giving them too much guff, but things are just clearly different now from how they were in the 70s-90s, and the people who benefitted from the previous status quo are not breaking their backs to figure out how.
"We haven’t done that with economic disasters since the 1970s"
We haven't done it about ANYTHING since the 1970s. The government is incredibly laissez faire outside of taxing and spending.
There is no reason we needed to have a housing shortage. There is no reason we had to have the phone system become 99.5% junk by volume. There is no reason we needed to let tech billionaires drive teens to suicide, or let opiates permeate the countryside. These are the result of a government that has abdicated its responsibilities. And while the economic issues are mostly the fault of Republicans, the lack of crucial regulations for new technologies - the lack of even an ATTEMPT - falls on both parties.
"All of this is vitally important to workable solutions. Parties are splintering and people are angry and voting with their bellies out of desperation. They just want this misery to stop. They are turning against each other as they fear that they won’t have enough. This is what austerity causes."
To Republicans: a feature, not a bug. Ain't it convenient: bad governance makes people want to vote for authoritarians, even if it's the authoritarians who are causing the bad governance. You don't have to pay too much attention to know that's what's going on right now, but it's way beyond what most Americans are getting in terms of reliable information in the '20s. And half the Americans who even bother to tune in are getting a steady diet of lies and distortions.
Well I’m a subscriber now after that. Imagine what more deregulation is going to do for the economy. I wonder how trump and his band of oligarchs will spin the approaching disaster?
I do think you need to keep repeating this... There is a lot of misunderstanding of economics.
"White House Senior Trade Counselor-designate Peter Navarro: “We put on significant tariffs on China, steel, aluminum, dishwashers, solar, a lot of increased countervailing duties to stop the dumping [in Trump’s first administration]. We had zero inflation from any of that. It never happened, and it’s the same movie this time."
The biggest problem with this argument is that he's wrong. There were three inflation spikes during Trump's administration, from ~1.5% to ~2.5%, and there almost certainly would have been another if not for Covid. And there were clear policy reasons for them (tariffs, tax cuts and pressuring the Fed to keep rates low); they were not random fluctuation.
Now Trump wants to implement bigger versions of all those policies - one would expect bigger inflation spikes. And if inflation spikes lead to higher inflation EXPECTATIONS then you can really get in trouble, as people start demanding bigger raises and companies schedule price increases more aggressively, and the inflation feeds on itself, as it did in the 1970s.
Nobody noticed the spikes in 2017-2019 because inflation has to get above a certain amount before anybody notices. That's why so many people think there was no inflation for decades before 2020, and why so many people seemed to be comparing 2022 prices to 2010 prices. ["My grocery bill doubled under Biden!" F---ing no, it didn't.]
"Inflation is a sign something is wrong that needs to be addressed - very likely high debt levels, and too much ownership and income in too few hands, so people outside that privileged group have fewer and fewer opportunities."
I mean, that is something that creates inflationary pressure, but I think the inflation of 2022-2023 can be explained pretty easily by half the people in the world not going to work for six months.
What is really interesting is that because the inflation had different causes than historical inflation, it most likely had a different solution. Which is to say, the Fed raising interest rates was not what caused disinflation. Inflation was going to come down because of normal market forces; all the rate hikes did was f--- over Biden.
And because there is so much private debt, raising rates didn't even decrease EFFECTIVE inflation that much, because of higher debt payments! Those are NOT factored into CPI.
What they did was so textbook I have a hard time giving them too much guff, but things are just clearly different now from how they were in the 70s-90s, and the people who benefitted from the previous status quo are not breaking their backs to figure out how.
"We haven’t done that with economic disasters since the 1970s"
We haven't done it about ANYTHING since the 1970s. The government is incredibly laissez faire outside of taxing and spending.
There is no reason we needed to have a housing shortage. There is no reason we had to have the phone system become 99.5% junk by volume. There is no reason we needed to let tech billionaires drive teens to suicide, or let opiates permeate the countryside. These are the result of a government that has abdicated its responsibilities. And while the economic issues are mostly the fault of Republicans, the lack of crucial regulations for new technologies - the lack of even an ATTEMPT - falls on both parties.
"All of this is vitally important to workable solutions. Parties are splintering and people are angry and voting with their bellies out of desperation. They just want this misery to stop. They are turning against each other as they fear that they won’t have enough. This is what austerity causes."
To Republicans: a feature, not a bug. Ain't it convenient: bad governance makes people want to vote for authoritarians, even if it's the authoritarians who are causing the bad governance. You don't have to pay too much attention to know that's what's going on right now, but it's way beyond what most Americans are getting in terms of reliable information in the '20s. And half the Americans who even bother to tune in are getting a steady diet of lies and distortions.
Great points. The problem as I see it is that it is repeated all the time by people who aren’t republicans.
I write too much when I'm procrastinating at work...
Well I’m a subscriber now after that. Imagine what more deregulation is going to do for the economy. I wonder how trump and his band of oligarchs will spin the approaching disaster?
Financial capitalism is what took over and jammed up the system in order to extract more gambling wins.
https://charleshughsmith.substack.com/p/is-placing-a-wager-in-a-casino-an