Inflation and the Class War

In this episode Mia walks us through the Federal Reserve discovering Neo-Marxism in a desperate attempt to figure out why inflation happens and why it matters.

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Episode Transcript

Speaker 1 (00:04):
Can we record this episode? Sure, let's start. I'm sure,
I'm sure we could use some of that as the opening. Hi,
welcome to It could happen here the podcast that is
about medical ethics in the eighteen sixties, not today, but
fair Yeah, no to today today. It's it's me because

(00:25):
we're long and we're doing an episode about inflation and
speaking of medical ethics while speaking of kinks. Actually, the
moment I said that, I was like, I have opened
myself up for that was some of the broad side
that was from some of the first weird interport internet
porn I came apart. It was specifically the cast of
duck Tails being like, okay, let's get to the topic

(00:50):
of the episode. That is, this episode is now about
duck Tails, inflation, fetish pornography. That is enough pre rebel
CHRISTI for what do you have for us today? Yeah,
so we're talking about inflation. Um, we're talking about economic inflation.
To be fair, this is somebody was making money off

(01:11):
of that inflation. I'll tell you that much. God. I
mean one thing, duck Tails actually does crossover because of
Scrooge McDuck and his giant and his giant. That's true,
and that actually it does. That's right, you can tell
you right now, that's not the only thing about him
that was inflated. Oh boy, talking about is dick. Okay,

(01:37):
let's let's keep it, keep it on tracked. Okay, So
all right, all right, if people are inflation, it's not good.
It's pretty high. It's I probably should have looked up
the inflation rate, isn't it, Like, yeah, I think it's
every it keeps going point six. Yeah. Yeah. But every
time someone says it's this or it's that, people are like,

(01:59):
well no, but they also change these these and these
indicators five years ago and these other ones ten years ago.
So really it would be this, and there's judging who's
securate about that? This? This is the thing. I didn't
put this in the episode, but there's a thing that
if you study economics you will realize pretty quickly is
that all of the like basically all of the aconstancy
so we have are fucking bullshit, and they're like are

(02:21):
basically they're they're they're really really fake, Like yeah, like
we we don't like one of one of the big
ones that you know, is like one of the underlying
things that makes all economics fake is that no one
knows how to actually calculate the value of of just
like a factory. Like like if if you have like
a bundle of goods, right, and they're not the same thing,
so I don't know, you have two factories they make

(02:42):
different things. Actually figuring out what the value of that
is is like fucking impossible, and the like the way
that it's done, and like if if you look at
like like there are these like the um producer statistical animals, right,
and the values that are in the like the un
ci people animals are literally them guessing because because the
thing is like the value depending on like the actual

(03:05):
value of the thing changes right depending on where it is,
unlike a supplied tomanker blah blah blah blah. And so
they literally just tell the people who are doing the
econometrics should just like pick a pick a random like
price that they that that they think is equilibrium. So
it's it's completely bullshit. It's it's it's bullshit, like literally
all the way down. It's nonsense. All of the indexes

(03:25):
are wrong. Uh yeah. Unfortunately the field of economics doesn't
really care about this that much, So we're gonna have
to sort of take them seriously. And the thing I
specifically want to talk about today was there was a
really interesting paper that was produced by two economists at
the DC Federal Reserve, M. David Rattner and J. Sim

(03:47):
about why inflation happens, which is called Who Killed the
Phillips Curve and Murder Mystery, and which we're talking about
this for two reasons. One uh, one because it's funny,
because I what is going to happen over the course
of this paper is that the Federal Reserve has combat
Federal Reserve has discovered Marxism, and they are going to
attempt to solve this mystery of inflation by by applying

(04:11):
by by by applying marks. And the second thing, the
second reason I want to talk about this is that
it reveals something that's very very important about the current
political situation, which is that both economists and like the
rest of the ruling class in general, do not understand
what inflation is or what they sort of unders that
kind of understand what it is. They don't know what
causes it um And before we go on here, I

(04:34):
should like explain what inflation is because most people I
don't know. The way I got talked about I talked
about about this with Garrison like a few days ago
about like like the way people get taught about inflation
is that inflation is when like your money is worth less. Yeah,
when when the government prints more money so to each
individual dollar is worth less because it's more of them circulating. Yeah. Yeah.

(04:57):
And and this is like this is this is propaganda. Um,
that is not what inflation is. Inflation is literally just
when prices go up. And if you think about it,
like okay, that that's kind of the same thing sort
of because if prices go up, like your your you know,
your your dollars are worth less money, right, But mostly

(05:20):
inflation isn't about the amount of money becoming less. Mostly
it's about something happens that that makes things cost more. Um.
And you know and and likely yeah, like the it
is possible for you to get inflation because the government
pretty too much money. But like mostly are like symbiotic, right,
government with your money because prices are going up so
that people need more money in circulation to buy things. Um.

(05:42):
You saw this happen a lot with the COVID pandemic. Um.
So it's it's that both these things kind of feed
off each other and contributing sort of. But but I
think something that's important to understand about this is that
if if you look into the actual econ stuff, like
the supply of money, like how much money there is
in the world, has very are a little do with inflation.
It only really has effects inflation when you're doing with

(06:03):
like I don't like nineteen thirties twenties Germany or like
China after World War Two, where just there's literally just
like you know, the government prints so much money that
like like my my I have my family has a
bunch of stories about like literally carrying out baskets full
of money in China to buy a train ticket because
like everybody knows about buy maur Germany too is like

(06:23):
the weird arrows full of cash and stuff. Yeah, but
this stuff that's actually it's really rare, and it's like
the reason everyone knows. But when it happens is that
it's only happened. It's happened like four or five times,
and mostly that's not that's not what why inflation happens.
And if you look at inflation right now, for example,
there's the prices of like a whole bunch of stuff
from like food to like microprocessors are going up because

(06:44):
a it's harder to produce things because of COVID b
our supply chains are collapsing, and see because Russian invaded
Ukraine and like absolutely annihilated an enormous portion of the
global food supply. And this that stuff causes prices to
go up, right because now it's harder to make a thing,
and because it's harder to make the thing, that thing
costs more. And this has you know, this has literally

(07:07):
nothing to do with with the money supply, right, Like
it doesn't have anything to do with how much money
in a circulation. UM. And there's another reason that that
that will get into kind of at the end that
inflation happens that is not also has nothing to do
with money, which is that corporations just do price markups
because they know people will pay for it. And that's
that's happening to UM. But having an explanation of like

(07:29):
why inflation is happening is really really politically important, even
even if the explanation that you have is completely wrong.
It it allows you to do really powerful things politically.
On Like, one of the ways that neoliberalism sort of
took power is that in in in the in the
seventies and eighties, especially in sort of sort of the

(07:52):
the seventies in particular, both both in academia and a
sort of politics written large. There's this problem where you
have a bunch of these old Anes and economists who
are like Kensians are like they're big on like using
government spending to keep the economy running, and like you
get a lot of welfare programs. But yeah, it was like, okay,
you can avoid crises by having the government to spending.
But the problem is that like they couldn't explain why

(08:14):
inflation was happening in the seventies. Um, and this was
because the Kenyans working the Kensians are working out something
called the Phillips curve, and we have to do a
little bit of econ bullshit. But it's not that complicated.
I promise I survived it, so it'll be fine. So
the Phillips curve says that like the closer you get
to full employment, and like the lower the unemployment rate gets,

(08:35):
the higher inflation rgetts. And this this sort of really
starts to kick in around from like five percent unemployment
to like four percent to three percent unemployment. Uh, the
inflation rate like spikes. And you know the reason this
is supposed to happen is because the lower the lower
the unemployment rate is uh way you start to rise
because as there's lots of people who' unemployed, you have

(08:56):
to pay them more money to get them to work.
And yeah, so this is and and the theory behind this,
right is that like wages increasing is what is what
causes inflation happened because it makes everything costs more. Now
there's a simple one obvious this is like, this is
a very simple and obvious solutions. So the problem of
why like inflation happens, and like all simple and obvious solutions,

(09:19):
it is also wrong. The Philips curve does not explain inflation.
I'm gonna I'm gonna refer everyone in the chat to
this tweet that I made, and I want you to
look at exhibit A, which is the Phillips curve, And
then I want you to look at exhibit B, which
is I actually plotted unemployment versus inflation in the US
from like nineteen until one. And I want to get

(09:45):
a description of what the second graph looks like, because
it's supposed to look like a curve. Well, so the
first the first graph we have we have an excite
an X Y graph of the Phillips curve, starting at
eight percent closer to the why access and then swooping
down and then flattening out at a percent on the

(10:06):
x axis for the unemployment rate versus the inflation right.
And then for the next graph we have, Um, what's
not a curve? What is instead inflation and unemployment graft? Um?
Except it's zig zagging everywhere like dark sides omega beams. Um,

(10:29):
it is not, in fact doing a curve. My my,
my favorite thing about this is that um, like multiple
multiple like, and this happens with both unemployment and inflation. Uh,
there are multiple unemployment rates that are associated with different
inflation rates, and multiple inflation rates that that are all
that that generate two different rates of unemployments. It's incredible.

(10:52):
It is it is, it is, it is a it
is an is an absolute sort of monument to how
much the stuff doesn't work. And there's a really good
reply to your graft tweet that says economists of the
modern day court astrologers it's basically true, like, which is funny,
I mean astrologers, though we're probably right. More often that's

(11:18):
true well, I mean they're simply guessing is it a
good idea to invade this country or not? Fifty odds
it works out for you, right if you're if you're
trying to predict, like I don't know, the SNP five,
there's a lot more variables. Yeah, And and this is
this is one of the things that like, okay, if
if you can be the person who like walks into

(11:40):
a lecture and goes the emperor has no clothes, you
can like attain immediate ultimate power. Because again this stuff
is like so it's so it's so trivially and easily
like falsifiable that like I you know, like built in
Friedman is able to do this. And you know, okay,

(12:01):
so I actually abut the false curve, the Phillips curve
that like I showed you that it's like a curve.
It's like a very simple one. There's all of these
really convoluted like modifications to it. Um. There's you know,
if you look like the new the New Kings in
Phillips curve or whatever they they've done, they've got a
bunch of math to it to try to like make
it kind of work. Um. The problem is that it
doesn't work. Uh, there's there there's a there's another Phillips

(12:24):
curve that's been that was like modified. But then Neil
By the new classical economists and the new classical economists
were like, this thing doesn't work. Okay, here's some modifications
you have to put in, but that curve also doesn't work. Uh,
and you know, and this is a real problem, right
because Okay, so if if if this inflation explanation of
why inflation happens doesn't work, like what is actually happening. Um.

(12:46):
Milton Friedman, who sort of like takes the the economic
scene by storm by like predicting a lot of the
inflation in the seventies and like sort of having an
answer to it. Is his his argument is that inflation
is they print too much money and there's inflate And
this is kind of a gross oversimplification of of what
his actual point is. But it's it's it's it's more

(13:09):
true than any of like Freedman's over simplifications. So I'm
just I'm just gonna believe it at that. And this
is what the Federal Reserve and like pull Volker used
to try to try to fight inflation nineteen seventy nine,
he Volker does. She just tries to massively reduce the
money supply. The problem is that this didn't work. Like
inflation in like inflation is still like above campertime. I

(13:32):
think it's bikes to like like fifteen percent or something
like into like nineteen four so and and just based
on how much larger Huey, Dewey and Louis got sometimes
two or three. Do you know who else wants? Oh boy,

(13:53):
that's right, Garrison. All of our sponsors are into duck
Tails inflation fetish pornography. This is it could happen here
a podcast sponsored by the concept of masturbating to the
cast of duck Tails getting inflated by bicycle pumps. Oh

(14:17):
we're back. Well I've done my part. Yeah, so okay,
So so we're left off. Right, There's there's a bunch
of inflation happening. Some of it is happening to Ducktail's characters,
most of it is happening to the economy. Uh. Paul
Volker has tried to stop the inflation by like making
there be less money, and this has done nothing other

(14:39):
than like dramatically increasing unemployment rate. Now, the problem with again,
Freedman sort of explanation of of of inflation is that
inflation persistence of the eighties and it only stops after
insert foreshadowing noise here. Uh, Reagan crushes the unions, and
we will come back to is to solve inflation, we

(15:00):
should stop all unions. That is your official position. No wow, okay,
but this, this is this is part of the position
of the of the Marxist federal reserves. So we will
we will get there a second. So alright, alright, So,
so the thing I've been describing that that freeman is
pushing about the money's way, this is called monitorism, and
monitorism is like the fakest theory of inflation, like it's

(15:21):
it's a it's a theory of inflation so fake that
like even other like even other like neo classical economists
don't accept it, like none of the other different neoliberal
schools of economics, like every single one of them look
at this and was like this is nonsense, Like what
what are you doing? But you know, so okay. So
that though, it's like it's like the TikTok astrology compared

(15:41):
to the neoliberal court astrology. Yeah, it's it's it's all.
It's like it's it's it's somehow an even faker explanation
of this. But you know this, this brings us back
to like where we started, which is that like, okay,
so if the monitorist stuff doesn't work, and the Phillips
curve also doesn't work, Uh, what is causing inflation? And
the answer from inside of the like the actual field

(16:03):
of economics is that nobody knows. Um. Here's Daniel k Rollo,
who was the former Federal resent who was a former
Federal Reserve Bank governor, and was a member of the
Federal Reserve Board. So he's a he's a very very
high ranking like guy inside the sphere of people who
try to apply econ ship and uh, here's here's the
quote that he gave about it. In quote, the substantive

(16:26):
point is that we do not at present have a
theory of inflation dynamics that works sufficiently well to be
of use for the business of real time monetary policy making.
So what are he's saying there is like if you
translate that out of econs because you don't even really
have to translate that out of econs much. What he's
saying is that he no one has any idea why
inflation works, and none on the models work well enough
to let you like try to deal with inflation if

(16:49):
you're you know, the people who control the money supply,
like the Fed. Now economists like we we we've seen
in the past, if you've been following this stuff in
the past like ten years issue, especially in the last five,
economists have been getting like increasingly desperate to explain what
the fund is happening, and they're getting increasingly increasingly desperate
right now because you know, hey, inflation is back, and
that that brings us to the paper I mentioned at

(17:11):
the top of the episode, which who Who killed the
Phillips Curve? And Murder Mystery, which opens talking about two
sort of massive recent failures of the like new Keynsie
and we fixed we we we added variables to the
Phillips curve until it like sort of kind of works
ish maybe, But you know, the only thing they're talking
about two of its sort of like incredibly massive failures.

(17:32):
The first is in two thousand eight, where there's you know,
there's a recession. Oh really, what happened economically? There's a recession.
But what's interesting about this, right is that, Okay, so
if you think about this, there's an inflation is there's
a recession, unemployment skyrockets, this should cause deflation. Well, you know,
because you know what happened to us in eight the

(17:52):
official Duct Hills video game came out. So I think
this could we are through the looking glass people, you know,
I mean, this is this is this is not any
more bullshit than any of the other stuff they're doing.
So like, but you know, okay, but there's there's this
there's this thing that happens. We're like, okay, the like
the inflation that the inflation rate should have been decreasing

(18:14):
and it just stays the same. And economists are like
what And this is this is called the missing deflationary period.
There's there's a second thing where d dren this sort
of like quote unquote economic recovery and the last like
ten years ish until basically until before the pandemic, employment
rates dropped really really low, and this should have started,

(18:34):
this should have triggered inflation, but it doesn't. And you know, okay,
And so the people who run the Philip Philip script,
like the economist are looking at this and they're like, okay,
what do we do? And the fed economist solution is
again and I share you not Marxism, and more specifically,
the solution is neo Marxism. Yeah, yeah, this is this

(18:55):
is this is this is something else I'm sort of
excited about, which is that I finally get to tell
the world what a neo Marxist is, because this is
technically a thing. It's just that none of the people
who talked about neo Marxists have any idea what it is.
The most modern neo marxis actually really well, I mean,
I guess you could have okay, what what what? Once
we explain it, I will, I will talk about how

(19:15):
you could theoretically have a post modern neon Marxist. But
I don't think I ever met whoa how welcome Welltory terms? Okay, okay,
so I'm excited to hear this. Yeah yeah, all right.
So what what is happening here is that there's an
old joke in Marxist circles that like, the most advanced
Bushwire economist is fifty years behind the most vulgar Marxist.
And this is this coming true. Uh, the Federal Reserve

(19:37):
economists are developing, they're trying to make a new Phillips curve,
and the new Phillips curve is what they call it
Collecki and Phillips curve because it's based for the guys
new curve just drops. Yeah, it literally is except this
this this is this is this is the neo Marxist curve.
And it's based on the works it's kind of loosely
based on him, but it's just based on the work
of a Polish Marxist economist named Mikail Collecki and Clucky

(19:58):
is a he's a very very weird Marxist, like by
Marxist standards, is extremely weird. And to explain why this is,
we we have to we have to speed We're gonna
have to speed run Marxism one oh one. So I'm
going to attempt to explain Marxism in one page. All right,
let's okay, okay, Mark Mark Marxism one oh one. Right.
You have a worker. She has to go find a

(20:19):
job and sell her labor to like get food to eat,
because otherwise you can't support herself. Um, so she goes
to work at a factory that makes like hospital stretchers.
Now under capitalism, and this is this is this is
this is one thing I'm explaining. This is this is
like the this is the orthodox Marxist interpretation. So the
people who are about to scream at me for a
million years about how this is wrong, I'm explaining the

(20:40):
orthodox position. Damnit, uh Marxism here? Yeah? No, okay, yeah,
Chris quick, question what what? What? What? What was Marx?
So Marx was a experiment in psychological experiment run by
the by Harvard University was concluded in but he wrote,

(21:07):
he wrote a bunch of books. And one of those
books is Capital, and and it in capital. So okay,
so you have you have your worker, right, and she
she she works to make hospital stretchers. And the thing
that makes the hospital stretcher have value is the amount
of time that it takes a worker to make it.
So under under this, this sort of understanding of what

(21:27):
Marxism is, value is just labor time. Right, The value
of an object is how many hours of work it
takes to make a thing. Now this labor time or
you know, like and like, how how long it takes
to make the thing? Uh, The value of it it
isn't measured by like how long it takes aim like
an individual cot, right, It's measured by like how long
on average it takes society to make. So you know,

(21:49):
for example, like you said, this is in Finland, right,
it's based on how long on average it takes to
make a hospital stretcher in Finland, not like you know,
how long it takes to make him like Olivia or something. Um.
And this is the technical term for the for like
this thing is is socially necessary labor time. UM. So,
our worker like works for through her day and after

(22:10):
six hours, she's produced enough value to support herself. She
can buy food, she can pay her rent, she can
like I don't know if you buy a car or something.
But she still also worked two more hours of the
day and during that time, the labor that she's doing
just goes to the boss. And this is called this
is called surplus value, like the amount of time that
you're working where you're working for the boss and not
to like support yourself. Uh. This this, this is called

(22:32):
surplus value. It is the objective route of exploitation and Marxism.
I yeah, it's it's it's it's it's the value that
goes directly to your boss. That and the reason that
like your boss can just steal this from muse because
they have the factor and you don't. So if you
want to produce something for them to survive, you have
to go to him and that this is This is
called the ownership of the means of production. Now, the

(22:56):
price in theory of of this hospital structure, right is
based value on its value or how many hours it
takes to produce it. Um and how precisely you get
from dollars as a unit of measurement from two dollars
from time is a subject of an absolutely interminable debate
called the transformation problem. If you want to go read

(23:17):
more about it. I have wasted probably four years of
my life reading about it. I don't recommend it, but
the answer is you can sort of kind of get
it to work if you funk with the numbers a lot. Uh.
But it's if you do what's unclear if they mean anything.
You can also bypass it entirely by arguing that only
works in the level of the entire world economy. Blah blah,
blah blah blah. I don't care. If you do care
about this, don't yell at me. Go read chapter six

(23:39):
of Bickler and Needson's Capitalist power Palmatics. Theory is critique
Fred Moseley's money in totality and Killman and mcglare is
a temporal, single system interpretation of Marks's theory of value.
Marks's value theory, and then Google Ducktails go big genuine
and then all of that, all of your notes on

(24:00):
both the texts and the duck tails send all that
to I Wright okay on Twitter, um, and they to
please you. You will probably come out of like you
will come out of the duck Hill stuff like more
saying than you will doing the Marxism stuff. So yeah,
but I've I've now covered my basis. H this is
this is this is orthodox Marxism, which is the stuff

(24:21):
we've been talking about is based on another There's another
assumption here that's important kind of technically, which is that,
like so orthodox Marks assumed that, like, so, you have
a bunch of sectors of the economy, right, there are
people who like make different stuff, and the assumption to
do who make hospital gurneys, people who do more important
work like make podcasts. Yeah, yeah, and and everything in between.
And the assumption is that, Okay, so you have a

(24:43):
person who makes like podcasts, right, and then and the
other people who make hospital structors figured out that making
podcast is more profitable than making hospital stretchers, so they
start moving all their capital into making podcasts. But then
because there's too many podcasts, the rate of profit goes down,
and eventually, like eventually the rate of profit across also
actors is supposed to equalize. Yes, yeah, so and and

(25:06):
this means that, like in the combination of this and
competition means that prices is supposed to tend towards value
or like the how much something cost in money is
supposed to tend towards the labor time socially necessary to
produce a commodity in a given place. Um, this is
like the basic thesis of like what you call orthodox
Marxist orthodox Marxist political economy would probably or Marksian political economy,

(25:28):
whatever the funk you want to call it. Um. Now,
in in starting in about the nine in twenties, there
was a new Marxism and this is called Neo Marxism.
Neo Marxism is basic Like I heard about that from
Dr Jordan B. Peters. Yea, yeah, yeah right now. Now
now we're gonna get the inside scoop on neo Marxism.

(25:49):
So Neo Marxism their basic thesis is like what if
profit rates don't equalize across like betwetween different parts of
the economy that make things, and you know, and because
they don't do what what if what if you don't
get competition because instead of people being able to just
freely move capital between like sectors, what if you have monopolies?

(26:09):
And if you have monopolies, instead of sort of price
being like a price is just value blah blah blah
bla because someone can keep moving their money around, price
is now a price. Price is now derived from the
power of a corporation because if you know, if if
if you if you're a powerful enough corporation to like
have a monopoly and stop anyone else in producing the
thing that you do. Now you can now you can
charge what are called markups. And this is where Michael

(26:32):
Collecky like enters from stage left. Um Collecki like he
probably should have been the father father of like modern
macroeconomics in the sense that like he invents a bunch
of the ship that like Caynes does before Kanes did.
But the problem is that he's writting a lot of
this in Polish, and so the sort of like anglophone

(26:53):
like economists are not reading it because he's in Poland
and he's a Marxist and he's writing in polo circles.
But he invents a bunch of the stuff that like
canes and fences slightly earlier. And she starts like looking
at like monopoly in oligarchy theory, and he starts trying
to apply it to Marxism, and it's what you know,
his inclusion is that monopolies are powerful enough that they
can charge these markups, which is just like additional price
increase over like what the like value determined price is

(27:15):
supposed to be, because they can provide anyone else from
selling a thing. And then you know, one what what
once you have a monopoly in the market, you can
force people to just like fucking suck it up and
pay it because they can't get it from anywhere else.
And this is actually this is like pretty similar in
some ways to like a bourgeois economic like theory of

(27:36):
how the stuff works, which is they're like, okay, yeah,
in bourgeois economics, like monopolies can increase the price over
We're they're supposed to be in a perfectly competitive market
because they have power. Blah blah blah blah, blah. But
there's something very different in coluctis work that is not
in the normal bourgeois stuff, which is that what what
he argues is that trade unions. Okay, so you have
a trade union, right it they represented the workers at

(27:58):
work at a company. And these that these trade unions
are fighting over the over the product of the markup,
and this keeps the size of markups and these sort
of like these price increases that monopolies are doing down
because the larger the markup these companies apply, the more
incentive there are there is for unions to sort of
like fight for pay increases, right because okay, well, the

(28:20):
more expective the goods are, the more money they're like
very clearly is on hand. And so the larger the
demands you get from organized labor. And this is the
insight that who killed the Phillips curve. The paper I
was talking about jumps on that unions fight over markups
and thus that the strength of unions is part of
what helps determine inflation. And they point out that you know,

(28:41):
unions want lower prices and for for goods, and the
reason they want lower prices for goods is that the
higher the price is of something, right, the less people
buy of it, and the less people like buy of
the thing, the less has to be produced, and that
means that there's less people being employed. And so if
you're a union and you want like the most number

(29:01):
of people being employed as you can, and so that
means that means that you want you want prices to
be low, because yeah, that because because lower prices means
more of the more of the good being produced, and
more the good being produced means more jobs. And this
is where we get to sort of the fundamental assumption
behind the regular Philip scrip. And this is also true

(29:21):
for this sort of like new like pseudo neo Marxist one. Right, Um,
their assumption is that inflation is driven by rising wages.
And you know, even though the unions are trying to
sort of like reduce the markup and like and reduce
markups reduced prices to increase the number of workers, firms
are trying to increase prices so they can make back
the money they're paying out in widges. Now when when

(29:44):
unemployment is like high, this doesn't matter because wages still
don't rise very fast because there's you know, there's this
gnormous pool of people who are incredibly desert for jobs,
and you can pay them sort of like nothing, and
they'll they'll come work for you, because the alternative is
you know, starving or getting evicted. But when when unemployment
is low, the bargaining power of workers increases, and that's
that's that's that's where the class war starts. Yeah, I

(30:06):
mean this, You see this in ninety one with the
screen Cartoonists strike that Scrooge McDuck brutally cracked down on
um and eventually had to seed seed ground to the guild.
But Scrooge, Scrooge McDuck was was brutal during during this
time period post the thirties rise of unions. That's right, Garrison,

(30:27):
and that's a big part of why Huey, Dewey and
Louie had to track him down in his money room
and stick a bicycle pump into his mouth while he
was sleeping and begin to inflate him largely while touching
themselves criticals Louie, my boy. So as as as as

(30:51):
with I don't, I can't. I don't even know how
to transition that I can't do it, but nobody does.
I mean, really, the main thing is that the concentration
of wealth in the hands of a small number of
individuals will inevitably lead to inflation, which is true. And
and this is one of the things that um that
that that the economists are sort of talking about here,

(31:12):
which is that like, okay, so once once you get
an actual sort of once you once you get like
a real class work going on right where you're you're
you're getting in a class work to the extent that
like the bargaining power of workers into bargaining power of
of like capitalist verbs are essentially like very close to
being equal. Um, you get inflation. Now, what's interesting about

(31:34):
this is that when you have strong unions, like when
you have strong unions, you get high rates of inflation
during periods of sort of inflation shocks, right, because the
unions are sort of like propping up wages in this theory.
But and this is the interesting part, right, you get
way lower rates of unemployment. And so it's okay, it's
to step back for a second. So what's happening here is, right,
if you have if you have strong unions and there's

(31:55):
something else in the supply chain that increases costs, say
to to to pick a copletely random example that never happened. Uh, say,
for example, you're in the nineteen seventies and the price
of oil is quadrupled in one year, and that increases
the price of everything. Now when when when you have
a strong but this never happened, don't google the oil shocks. Actually,

(32:16):
literally don't google the oil shocks because almost everything written
online about the oil shocks is a lie. I yeah,
I think I've talked about that before. On the other
pois never sood but yeah, it's it's all lie. But
but basically, like one of the what you know, okay,
what what what happens here is if you if you're
strong unions, you get a bunch of inflation, but people
don't get fired. And when when corporations are strong and

(32:38):
you don't have unions, you know, you get these shocks
and the inflation rate is much lower, but everyone gets fired.
You unemployment rate goes up to like ten percent. Uh.
It's you know, it's an absolute disaster. So that's that's
one thing to note about about the way that sort
of the Philips curve, the sort of Marxian Philips curve,
like analyze the situation, right, But there's another consequence here

(33:00):
which comes back to like what inflation is under a
Phillips curve, Right, Inflation en Phillips curve is literally just
wage increases. Right, So when when union power is weak,
inflation stuff. But like, what does this actually mean? What
it means is that wages aren't growing, sure, aren't. Yeah,
And and this brings us back to like the sort
of weirdness we saw in the early part of the episode,

(33:21):
right right after two thousand eight, right where there should
have been deflation because the unemployment rate was really high
and also like junior recovery period were uninflation rate is,
unemployment rate is super low. But and there should have
been inflation, but there wasn't. And the answer is why
why wasn't there inflation? It's well, okay, because no one
had a union and so everyone's wages just stayed the
same the whole time. I have another explanation for this.

(33:43):
And when I previously when I previously said the Ducktails
game came out into US to night, I was actually incorrect.
US Night was when Nintendo Power listed the Ducktails game
as the thirteenth best Nintendo Entertainment System game. Um there was.
It was voted that into US a night. Now, it's
important that thirty it's a very unlucky number. So by
voting the duck Tails game best game from the NS

(34:05):
into thousan eight, and they could have basically caused a
psychic rift in the fabric of the universe, creating the
financial crash. That's fascinating, Garrison, because I was thirteen in
two thousand one when I came across that angel Fire
website with home drawn Ducktails inflation pornography. Wait, so this
CAUs I think in a lot of ways. Yeah, yeah,

(34:28):
that's all connected. You know who else may have been
a contributing factor to nine eleven? The products and services
that support this podcast? I think that's right, that's right.
We do not accept a sponsor unless it gets the
explicit sign off of the King of Saudi Arabia. Um who,
if you'll remember, did nine eleven? All right, Yeah, I'm

(35:00):
not getting and I am not getting paid off to
properly tradition this, so I'm not going to Uh So
it turns out that yeah, so the reason there hasn't
been inflation is that there's no unions. Because we don't
have unions. Are wages all suck? And uh? This means
that you know, wages, wages are stagnant low, and it
means that they're not a drive. The unions aren't a
driver of inflation. And also low wages are driver inflation

(35:21):
because they you know, like unions aren't around to increase wages. Now, Meanwhile,
the other thing that this suggests is that monetary policy
and they okay, I think they're they're in exact analysis
was like I think like eighty four percent of like
inflation shocks can be explained by looking at like union density, um.
But this also means it means what like monetary policy,

(35:42):
like how much money there is like in the economy
has like basically no role inflation whatsoever. And and this
is you know, okay, so like like this has all
been sort of one perspective from some economist of the
Federal Reserve, and we can ask the question like why
does this matter? Right, like why why why? Why does
like sort of one like group of people on the
Fed like their response this matters, And partly it matters

(36:04):
because it's again extremely funny to watch the Federal Reserve
turning to neo Marxists too, like try to explain why
inflation happens. But it also matters because theories of inflation
dictate inflation policy. Um. Jerome Powell, who's the chairman the
Federal Reserve, has had a press conference on May fourth,
and it's too long to play the whole thing, but
he has the speech, and he lays out a few

(36:24):
things that are interesting. So he talks about a bunch
of stuff that's causing inflation, rights, production bottlenecks, increasing crude
oil prices, concreasing commodity prices from like Russia's invasion of Ukraine.
Like he's lockdowns and shine oother keeping factory like clothes,
and like, yeah, okay, those are all like reasonable things
that cause inflation. But then when you get to like
what the Fed is actually going to do, he starts

(36:45):
talking about how the job market is too good for
workers right now and unemployment is too low and that's
what driving wages up. So he's planning he's going to
tinker around with monetary policy to reduce wages and decrease
the demand for jobs. And this brings us back to
two things. The first part is just the class war
part of inflation. Right, prices are rising right now because
someone inside like prices are rising right now, and someone

(37:09):
inside if you want them to not to like cease
to continue rising somewhat some part of like the company
is going to have to take a hit to like
the their percentage of like the sort of the markup, right,
like their their percentage of like the price increase of
the corporations do above like cost and okay, so someone
has to do this, And the Federal Reserve like absolutely

(37:32):
wants to make sure that the person paying for that
is you, the worker. And the second part is something
you might have picked up on if you're paying close attention.
And this has been something that's been true of of
both like the FED chairman and the FED economists do
this too, which is they do this wh they talk
about inflation. They do this kind of two steps. Right,
They talk about a shock or something that causes prices
to increase, like you know, a bunch of Ukrainian wheat

(37:54):
like suddenly being on harvest will because the Russian army
is squatting on it, or like Chinese factory shutting down
just an amount of weed or price electronics or sorry
reduces the amount of wheach or the amount of electronics
being produced that drives out prices. Right, they talk about
like there's an inflationary shock, and then they start talking
and instead of talking about that anymore, they start talking
about unemployment levels and the job market and monetary policy
being what drives inflation. And I think this is this

(38:16):
is a very important piece of ideology because if you
look at what's going on here, right if if you know,
if you go back to the seventies, it's not like
inflation in the seventies is not the Union's fault, like
you know, the the the in the inflation in the
seventies was like in large part the original price increases
because the price of oil country country pulled in one year.
But you know, but the Fed instead focuses on wage

(38:38):
increases is what drives inflation, even even if they're sort
of like using like Marxists to do it. And what
they're doing here is shifting the focus from the actual
shock that is like the thing, the immediate thing that
is increasing prices, and they're shifting the focus from the
shock to the people who are reacting to it. And
from there the question stops being about like dealing with
the shock itself and starts being about who is going

(39:00):
to pay for these price increases? And in the nineteen eighties,
like Reagan's Reagan solutions, this is well, okay, she's just
gonna make organized labor pay for it, and so she
just annihilates the annihilist the unions. He uses the state
to do it, just crushes the unions completely. And price increases,
you know, prices stop increasing, right, And they stop increasing
because the production costs of all of these goods like
decreased because workers are no longer getting paid and they

(39:22):
lose all their benefits. But this is the thing they
never dealt with the actual source of the problem, right,
Oil prices are still really high to this day, and
we've never transitioned off oil. And so to look at
sort of that problem, I want to briefly look at
another theory of inflation, which is one presented by Steve Mann,
who I think I've actually had on the show before.
He's one of the people at Strange Matters, and he

(39:44):
wrote he wrote this article called Notes towards the Theory
of Inflation, which is based on the work of a
heterodox economist named Frederick Lee, who is he's a cool
guy and all of his stuff is like completely out
there from the compens from decom perspective, but it it
makes more than most regularly kind of stuff. So the
sort of like founding observation of like that like projectally

(40:06):
is basing his stuff on. Is that like, okay, prices
are not set by like an abstract market. Right, the
price of something in a grocery store is set by
a guy like that there there there was a specific
guy or they're like several specific guys whose job it
is to set the prices for the firm. Um. This
this this theory of like what it's not even a theory,
like the fact that this is how prices are formed

(40:27):
by just a guy who sits there with a notebook
or like a computer. Is this is what the price
is going to be. This is called administered prices. And
Lee like very confestently argues that like this is how
firm This is how both large and small firms actually
set their prices. Right, a guy calculates his expenses, he
adds a mark up, and he sets the price. Now,
Steve Man argues that these prices don't generally tend to

(40:48):
increase naturally because the price setters don't generally want to
just increase the price randomly. Because if you if you
increase the price randomly you will pass off your customers.
And the customers you know, okay, they'll they'll tolerate like
some small increases. But if you raise the price enough,
they lose your goodwill towards your brand and they'll like
they'll go off and try to find another brand. And

(41:09):
this is disastrous because even if you reduce the prices
back down again, like the good will is lost. And
that's sort of like you know, the sort of like
happy association that like you have in your brain between
like I don't know, like Nestly chocolate or something, or
like whatever brand of things you're buying, like you get
piste off with them because the price is now like
way higher, so you know, you don't go back to
the same like grocery store because that they've increased their prices.

(41:30):
Now obviously this is like there's like this subject constraints, right, Like,
if if you need insulin, and the monopoly that controls
insulin production, just jack's the price, You're screwed, right, there's
no sort of like there's no other place you can
get insulin unless you're gonna try to make it so
your your your solutions are you either try to ration
it and you die or you pay for the price
increases and this this is bad and it does happen.

(41:52):
But most goods aren't like this, and so price increases,
when they happen, tend to be small and fairly infrequent,
unless unless the person that The reason this doesn't this
wouldn't happen is if the person setting the price has
no choice. And the main reason that if you're a
person setting a price, that you would have no choice
but to increase like the price that that that that
you're setting. The main reason you would do this because

(42:14):
something happened to your supply chain. UM, I don't I
don't know if you'll see that. There was a TikTok
going around from a farmer in Iowa who was talking
about like why price white food prices are going to
keep increasing. The woman, honestly, I bless her heart, honestly
thinks that food prices are not going to go up.
She thinks that this is the highest they're going to go.
I tried to explain to her that that was not

(42:34):
the case, that they're absolutely going to go up even more. Um,
and I told her there are things that like we
have to buy, there's something we had to buy that
two years ago, cost is twenty four dollars. Last year
was about forty six. This year it is costing US
nineties six dollars. Okay, local farmer fifty had a cattle.
It's costing him eight thousand dollars a month to feed them.

(42:55):
Please understand, food prices are going to go up. Yeah,
and so and so you can see here what's happening.
It like at some point down the supply chain, prices
are increasing either because of like climate change, because of
the word Ukraine, because of COVID, because of like any
thousands sort of other factors. And eventually the like the
farmers who are setting the prices, right, they have to
increase their prices because they don't have they don't have

(43:16):
a choice, right, because because the each person further back
in the suppyline as a charity, right, like they have
to be able to pay a bunch of ship build. Yeah,
and and this this sort you know that this is
the Steve calls it like that. He calls it the
supply chain theory of inflation. Right, and you know in
this model, like this is what's causing inflation. Right, each
person successively down the line has to eat, has to

(43:38):
increase their mark up because they have to cover their
they have to cover the new, newly increased production costs.
And this is important because unlike most models of inflation,
inflation isn't being caused by like some kind of like
giant macroeconomic thing, like it's not being caused by like
unemployment or like monetary policy, but it's being caused by
very very specific microreconomic forces that you know, there are

(43:59):
literally specific people who as a reaction to a specific
thing happening that makes production harder or increasing their prices.
And this is a very different sort of you know
that this is a very very different theory of inflation
than like any of the like seventeen mainstream ones, all
of which are bad in various ways. And yeah, and

(44:20):
there's there's one other thing I want to mention though
that kind of isn't talked about in this model, that
is absolutely happening right now, and that's um And then
something that is really one of the drivers of inflation,
which is that corporations are raising prices because they think
they can get away with it, and they're just pocketing
the costs. And and this isn't so this isn't like
a sort of speculative thing. Uh companies, when you ask

(44:43):
them about it, are very very open about it. Here
here's from a Business Insider article. What we are very
good at is pricing. Colgate Palm of Oil CEO Noah
Wallace said, whether it's foreign exchange inflation or raw unpacking
material inflation, we have found ways over time to cover
that in our margin line. We've been we've been very

(45:03):
comfortable with our ability to pass on the increases that
we've seen at this point, said uh Croker CFO Gary
Miller Chip in October. And we would expect that to
continue to be the case. And here here's from here's
from the Wall Street Journal, where more people talk about
doing this. We have not seen any material reaction from consumers,
Procter and Gamble finance chief Andre Sholton said last week,

(45:23):
referring to a string of price increases that went into
effect in September. So that makes us feel good about
our relative position. Now, those two articles, like, just those
two articles alone talk about prices raising, Like talk about
companies that are just raising prices because they know consumers
will pay for it, because I think there's inflation happening,
and those companies just from those two articles alone include

(45:44):
Procter and Gamble, nest LEA, Verizon, Unilever, Colgate, Palm of Oil,
Coca Cola, Pepsi, Gillette, Chipotle, A, T and T, Verizon, Kimberly,
Clark Corp, Clarox, Reynolds, Kroeger's, and Albertson and like that.
That's that's just like the corporations in the article that
are like specifically named as talking about having done this right.
And they can get away with this because normally normally

(46:06):
write price increases to piss people off, they go to
go free for brands. But if if prices across the
board are already increasing, you can you can just like
do basically like a price gouge increase, and you can
do and you can increase your markup and it doesn't
it doesn't affect your goodwill because people just assume that
inflation is already happening, and that inflation happens sort of naturally.
Is either because the wage like wages are too high,

(46:26):
there's too much money in circulation, so oh, there's just
like inflation happening. Is this like abstract thing instead of
what is actually happening, which there are very specific like
they're individual people with with names and addresses who specifically
increase the price in order to screw you, and that
that that's that's what's actually at stake here, and having
explanation for why inflation happens, it tells you who to

(46:48):
blame for it. Like right now, Larry Summers, who was
the former Treasury secretary who was responsible for arguably responsible
for two thousand directly responsible for two thousand and eight,
one of people who completely annihilated the entire Russian economy
in the nineties. Uh, he is has apparently been on
the phone with Joe Biden, and he is going around
saying that in order to solve inflation, we have to

(47:10):
cut wages and rage the unemployment rate to five percent,
like for five years, like on average five percent for
five years. And so this means either you have five
percent of five percent, five years of five percent inflation,
two years of inflation at seven point five percent, or
like one year of teen percent unemployment. And again unemployment
right now is it like three percent? So she's talking
about millions, potentially tens of millions of people losing their

(47:32):
jobs in in order to in order to solve inflation.
Because Summers again, Summers is going back on the sort
of Phillips model ship, right, where inflation is caused by
you know, it doesn't even matter what's actually causing the inflation,
which is a bunch of a combination of price gouging
and like, uh, supply chage distructions. Right, She's going, Okay,
who His theory isn't about what is causing inflation. His

(47:52):
theory is about who's way to pay for it. And
his solution is, fuck you. You are going to pay
for it. You're going to pay for both the price increases,
which the prices won't fucking come back down. That's the
other part of this, right, Once once you get inflation,
and once the prices rise, they're sticky, they don't fucking fall.
And what he's saying is, yeah, fuck you, you you are
going to pay for it. You're going to continue to
pay these prices. You're also going to pay for it

(48:13):
by reducing your wages. You're going to pay for it
by getting fired. And you know, and this is this
is the sort of the choice that we have, right,
It's either we let the ruling class tell exactly the
same stories about why inflation happens. They've been telling fifty
years that they know we're wrong, that they that they
know are so wrong they're desperate enough to turn to
fucking Marxism to try to find explanations for it. Or

(48:33):
we find it, we find a new like explanation of
why fucking inflation happens, and we go back, we take
the stuff that they've stolen from us, and then we
appropriate the bastards so they don't do it again. And
that is that that that that is what I have
to say about inflation. Yeah, I mean again, what what
we need to do is if we organize as a people,

(48:58):
and as a people come the vacuum tube that we
need to shove down the esophagus of Summers and other
members of the ruling class in order to inflate their
organs so that their asshole widens and we can collectively
fuck them until they deflate. Is that more or less accurate? Chris?

(49:22):
Would you say? Economically? Sure? I mean, you know this
is honestly okay, I would say, like, this is the
thing that, this is the thing about having an explation
for wine inflation happens. Right, It doesn't matter if it's
true or not. You can as long as long as
you have a compelling enough explanation for inflation to cause
people to do something you can you can, I mean,

(49:42):
and this this is one of the things. For example,
like this is one of the things that caused Tenement
to happen, is that there was skywalketing inflation and the
like workers had an explanation of inflation. It wasn't right,
like yeah, I mean that their explation for inflation had
to do with like the like China was taking in
a bunch of loans and the CCP was spending all
their money on warts cars and it's like it's it's
kind of marginal whether it was like true or not,

(50:04):
but it doesn't matter, right, infla inflation could be caused
by the fact that we haven't fucking inflated right on
that point. And this is this is this is true.
You can look this up online. Um. So, the original
Ducktails game from nine was remastered in two thousand thirteen,

(50:28):
and it was real. It was released on August thirteen,
two thousand thirteen, the remaster of the Duct Tails game
thirteen thirteen, both on Lucky Numbers. I think that could
have just just as much to do with our current
economic problem around inflation as basically anything else. Chris has
said here um because August two thousand thirteen Ducktails getting

(50:51):
released Scrooge McDuck main character. That is too much to
be a coincidence. Yeah, we are through the looking glass.
I can see the Nords like there's there's there's no
getting away from this one. Look, all you have to
do is you just gotta go. You gotta show up
to the rule of the fucking money is and you've
gotta take it from them. Do you guys show up

(51:13):
kind of show up to the factories and inflate your
bosses and you will inflation will come down. Yeah, would
work everybody. It could Happen here as a production of
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(51:34):
visit our website cool zone media dot com, or check
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