Why and How Inflation Continues

 Why Inflation Continues, Robert Reich.

 

https://open.substack.com/pub/robertreich/p/kamalaconomics

The Cost of inflation + Reich

  

https://robertreich.substack.com/p/corporate-soaring-profits-are-from?utm_source=post-email-title&publication_id=365422&post_id=141700310&utm_campaign=email-post-title&isFreemail=false&r=r3hcp&utm_medium=email

	View in browser Where are the record corporate profits coming from? Your thinning wallets A big part of why the public isn’t crediting Biden Robert Reich, Feb 16

How the Federal Reserve Protects the Top One Percent

How the Federal Reserve Protects the Top One Percent: Our central bank operates by and for the financial elite

Our results show that the Fed’s policy helps preserve the value of the wealth of the top one percent. Without intervention by the Fed, a 6 percent acceleration of inflation would erode their wealth by around 30 percent in real terms after three years—assuming the inflation rate does not continue to rise. But when the Fed intervenes with an aggressive tightening as noted above, the one percent’s wealth only declines about 16 percent after three years. That is a 14 percent net gain in real terms. Our estimates indicate the top 10 percent would experience some net benefit as well from Fed intervention, similarly protecting the real value of their wealth, but the magnitude of the effect is much smaller.

Wild Inflation :Not Anymore

 

Wild Inflation? Not Anymore.

https://portside.org/2022-12-26/wild-inflation-not-anymore

Portside Date: December 26, 2022

Author: Mark Weisbrot

Date of source: December 13, 2022

Los Angeles Times (Opinion - OpEd)

Do Americans understand what is happening with inflation in this country? This is an important question, because the public’s perception can influence national policy and political choices. Before the midterm elections one month ago, 87% of likely voters told pollsters that inflation was extremely or very important in deciding their vote.

Let’s take a simple example of what most Americans see most in the news, and compare this with the data that economists, and journalists who cover the U.S. economy, are looking at.

This week our government released the November data for the Consumer Price Index, and the headline number was 7.1%; which was down from 7.7% last month, but still a very high rate of inflation for the United States. The phrase, “highest levels since the early 1980s” has accompanied much of the reporting for the last few months.

But these numbers are, in some very important ways, out of date.

It’s true that prices as measured by the Consumer Price Index (CPI-U) in November of this year were 7.1% higher than a year earlier.

But if we look at the five months that we have just experienced (July through November), the bigger news is really how much the rate of inflation has been coming down.

For these five months, annualized inflation has been just 2.5%. Just to be clear: That 2.5% is not the increase in prices over these five months (July through November). It’s the increase in prices that we would have if this inflation over five months continued for a year.

By contrast, the annualized inflation of the five months prior to July (February through June) was 11.8%.

Although the Fed’s target is 2% (the Fed uses a different measure of inflation than the CPI but pretty close to it), most economists would not be worried about inflation of 2.5%. In fact some of the world’s most prominent economists would favor 3%, over 2%, as a target.

There is a long list of facts and issues known to economists that have led many of us to less alarmist views than those of the wider public, including some politicians. For starters: The spike in inflation over the last 18 months was primarily a result of external shocks: The war in Ukraine was a big one, especially for gasoline prices.

A Memo to Democrats

A Memo to Democrats: We will win this election if we convince voters we care about their economic well-being.

The Three Biggest GOP Lies of the Midterms,

 The 3 biggest GOP lies of the midterms (in addition to the Big Lie) Robert Reich,

 

https://robertreich.substack.com/p/the-3-biggest-gop-lies-of-the-midterms#details

5 Myths About Inflation

5 Inflation Myths. Every week we see prices rising—at the gas pump, at the grocery store, and at clothing stores. Across the country, families are having to cut back spending as the value of their dollars shrink.   The reasons for escalating inflation are hotly debated, but some theories gaining traction have not been grounded in the data. EPI research sets the record straight on the causes of inflation—and how policymakers can best restrain it. Below, we debunk 5 top inflation myths.

Myth #1: Workers’ wage growth is driving inflation. Nominal wage growth—while faster relative to the recent past—has lagged far behind inflation, meaning that labor costs have been dampening, not amplifying, inflationary pressures all along.   Myth #2: Corporate profits are not contributing to inflation. In fact, fatter corporate profit margins have driven over half of the increase in prices in the nonfinancial corporate sector between the second quarter of 2020 and the end of 2021. This is not normal. From 1979 to 2019, profits only contributed about 11% to price growth. Ignoring the role of profits makes inflation analyses a lot weaker.    Myth #3: Federal relief and recovery measures overheated the economy and fed inflation. Evidence from the past 40 years suggests strongly that profit margins should shrink and the share of corporate income going to labor compensation should rise as unemployment falls and the economy heats up. But the exact opposite pattern has happened so far in the recovery—casting much doubt on inflation expectations rooted simply in claims of macroeconomic overheating. In short, the labor market is strong, but it’s not overheating.

Myth #4: Removing import tariffs would be a major tool to fight inflation. Tariffs were put in place far before early 2021 when inflation began rising, and eliminating tariffs could not significantly restrain it. Further, removing tariffs would not be costless. Tariff removal could result in job losses, plant closures, cancellations of planned investments, and further destabilization of the domestic manufacturing base, which would increase domestic dependence on unstable import supply chains.   Myth #5: Investments in child and elder care would accelerate inflation. In fact, investments in child and elder care could help restrain inflationary pressures. By subsidizing families’ use of child and elder care, such investments could boost future labor supply by allowing parents or elder’s care-givers to look for paid employment while remaining confident their family members are receiving care. Duane, EPI research corrects false narratives that result in anti-worker policies. Please help us spread the word by sharing this blog post with your networks and, if you are able, please consider making a gift to support EPI’s important work. Thank you for your support and for helping EPI by sharing our research and resources with your network. We appreciate everything you do for our collective movement.  EPI Staff

 

See also;  Robert Reich 

https://robertreich.substack.com/p/bezoss-inflation-idiocy

  

Is the Fed Breaking Too Hard ? Paul Krugman

 https://www.nytimes.com/2022/09/29/opinion/columnists/federal-reserve-inflation.html?

Robert Reich on Inflation

 Reich on inflation.

 

https://robertreich.substack.com/p/who-will-bear-the-pain

 

Inflation:Our Bewildering Economy

Our Bewildering Economy: What are the contradictory trends and policy choices? And does the Inflation Reduction Act live up to its name?

Inflation is not the biggest economic news

Inflation Is Not The Biggest Thing Happening In The Economy Right Now Family poverty has substantially declined thanks to the child tax credit. By Arthur Delaney

 https://www.huffpost.com/entry/inflation-child-poverty-tax-