The IMF Admits We Were Right About Inflation

Mia talks with Steve Mann and John Michael Colón about their supply chain theory of inflation was vindicated by history and then adopted by economists.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:08):
Okay, that was that was that was slightly longer of
an a total shriek. Now was ex backing. Robert has
been coming after me for not doing a total shrieks
to start the podcast enough so that that's how we're
starting this episode. It could happen here the podcast where
we taken into Noverhre's victory Lap Because yeah, so, if
you've been following the discourse about inflation over the past

(00:31):
about two two and a half years, and especially in
the last like maybe year or so, so very interesting
stuff has been happening, and the stuff that we've talked
about on this show, and then also stuff that's been
sort of moving around in the sort of broader discourse
and has now reached like the IMF. And the thing

(00:52):
that's been happening is that the theory of inflation that
I've we've been pushing on this show and that also
very importantly that has been being developed by Strange Matters
has been like incredibly vindicated to the point of everyone
else adopting it and then claiming that they invented it.
So yeah, we're this is this is this is the

(01:14):
this is the Inflation Victory Lab episode. And to talk
about the fact that these two people and their colleagues
were right about inflation and a bunch of other stuff too.
Is John Michael Kolan and Steve Mann, who are both
co editors of the magazine Strange Matters, And yeah, both, Fiji,
welcome to the show.

Speaker 2 (01:32):
Thanks so much for having us.

Speaker 1 (01:33):
Yeah, and I'm excited about this because I've been wanting
to do this episode for like ever since. So the
the IMF tweeted out a graph that was arguing that like,
I think it's like fifty percent of inflation, and the
EU was based on corporate profits, which was like them basically,
and this is this is them, and like all the

(01:55):
mainstream economists are finally like having to admit that we
were fucking right about it inflation.

Speaker 2 (02:01):
Yeah.

Speaker 1 (02:01):
So I guess before we get into what we what
you two were arguing and what you collegues are arguing,
we should talk a bit about, like I guess who
you two are, and also like talk about Strange Matters
again because I think it's been a bit since y'all
have been on.

Speaker 2 (02:15):
Yeah. Absolutely, So, Strange Matters is a this is our
kind of boiler plate, a magazine of new and unconventional thinking.
In economics, politics, and culture, and we have a political bent,
so we are broadly speaking all some flavor of libertarian.
Socialist is kind of the umbrella term that we've used

(02:36):
for ourselves, but that varies depending on the individual kind
of members of the team. So we've got people who
are anarchists, We've got people who are inspired by like
democratic and federalism. We've got like people who don't like
a lot of those labels but are really into like
direct democracy stuff. But like you know, the the four
of us basically converge on the direct democracy, you know,

(03:00):
socialism is putting people in charge of the decisions that
affect them kind of school of things. So in terms
of our economics pages, however, we've for the last couple
of years been really dedicated to publishing heterodox economists, economists
who don't correspond to the usually quite right wing mainstream

(03:22):
of the economics discipline, but challenging in fundamental ways. And
there's a bunch of different schools of heterodox economics, like
you know, everyone knows about, like Marxists, but there's also
post Kinesians and ecological economics and feminist economics and a
whole bunch of different schools. We've been dedicated to publishing
people from all those different schools and trying to kind

(03:44):
of get them to write in a style that's more
accessible for ordinary people, so that some of those ideas
actually start not just reaching the public, but actually reaching
each other because they don't really talk to each other
very much.

Speaker 1 (03:54):
This is this is one This is one of the
big problems is like I mean even just inside of Marxism,
like if you if you get six Marxist in the
same we all have nine different positions and they'll all
be like ready to murder each other over it. And
that's that's just the Marxists, and then you expand out
to all the rest of the other Heterodoxicontaoist people, and
there's a lot of weird and sort of pointless rivalries
going on that prevents people from like fusing really useful

(04:17):
theories together.

Speaker 2 (04:18):
Yeah. Absolutely, Yeah.

Speaker 3 (04:20):
We tried to be a platform for diverging opinions to
actually be put into dialogue with each other, and we've
definitely I don't think there's been a single piece that
all of us have been in lockstep agreement on theoretically,
and I think that's a real strength. Actually, Yeah, like
there's there's quite a there's quite a few pieces that

(04:41):
at least one of us is like, I still don't
really know about this thesis, but I've been there have
been times in which I've been down on a piece,
but it does amazing, so let's go with it.

Speaker 2 (04:53):
And also, you know, part of the reasoning for that
is not just to kind of like Lucy Goosey, let's
all get along and and sing around a campfire, but
it's actually a very principled thing because part of the
story that we're telling with the magazine is how we
have these enormous problems, you know, climate change, the whole
crisis that the democracies have been going through since the
two thousand and eight crisis, the whole and since like

(05:16):
the rise of global fascism in the twenty tens, like
the what are we going to do about like the
Internet and its future? What are we going to do
about these these horrible culture war type issues that like,
you know, people talk about it as the culture of war,
but actually it's these massive reconfigurations that we have to
do of our consciousness in order to think about you know, gender,

(05:40):
national identity, and ethnic identity and all these other things.
In different in new ways that are actually like freeing
and emancipating and stuff like, Like all of these problems
are vast and nobody actually knows what the answer is,
and that includes leftists. Like there's a lot of these
problems that are either like too technical or to complex
for any one person to have the solution. So there

(06:02):
needs to be a space where we kind of come
together people who are kind of like of good faith
and who like are trying to kind of do the
whole democracy and egalitarianism thing, and we actually butt our
heads together across lines of difference and are like, Okay,
what are we going to do about this? And what
are our different perspectives and what's the what's the common ground,
and what are some little bits and pieces of things
that people have figured out that we can kind of

(06:23):
stitch together into something that will let us not just
get steamrolled by the fascists. And that that's the kind
of space that we're trying to be, and that's why
we try to accommodate these different perspectives, even though we
ourselves tend to come from rather strong perspectives both individually
and as a group.

Speaker 1 (06:40):
Yeah, well, and I think we can like this inflation
sort of argument that's been playing over the past few years,
I think is a really like it's a really good
indication of how well this stuff can work. If it's
if it's like you know, like the fact that y'all
have basically had the inflation theory that like a bunch

(07:01):
of mainstream economists were going to stumble over in the
last like eight months, had effectively written we're discussing and
we're writing it like two years ago. Is a is
a sign that something is going right?

Speaker 2 (07:14):
Yeah, we feel really vindicated.

Speaker 1 (07:16):
Yeah, it's it's been very, very very funny to watch.
So I guess we should move into a bit about
what this theory actually is, and the very very short
version of it is that it's a supply chain theory
of inflation. It's a theory of inflation that tracks, you know,
tracks price increases based on like like price movement based

(07:38):
on stuff happening like backwards in the supply chain. And yeah,
that turns out to have been a really useful both
predictive thing and explanatory thing once the inflation actually started.

Speaker 2 (07:50):
Yeah, I just really wanted to highlight that it's Steve
who wrote the initial essay where we first put those
pieces together, it's it's it's Steve's supply chain theory of
inflation were anybody else's, So I definitely I defer to
you in terms of, you know, laying the groundwork for it.

Speaker 3 (08:05):
Well. I wrote a piece called Notes toward e Theory Inflation,
and it was kind of born partly out of frustration
over the fuzzy language in which economists will try to
speak about inflation. And when I was a grad student,
I would like encounter it not just from any particular school,
but from broadly speaking, most of the schools of economics.

(08:27):
And like it's been prior to this inflationary episode and history,
it has been almost forty years since we've experienced anything
like this. And you know, in the in the last
period of like runaway inflation in the eighties, people were
having a similar reckoning, although they didn't quite coalesce around

(08:49):
supply chain and cost puss related theories of inflation like
they are at this time. But like the theory like
in a nutshell, the supply chain theory of inflation is
essentially saying that along there there are groups of businesses
called supply chains who buy inputs from each other in

(09:11):
order to produce products and sell them to either the
next person in the chain or to outside consumers that
the end user and over time, given stressful enough biophysical
conditions that they all find themselves in even if they
don't want to raise prices. And broadly speaking, we know
from empirical studies that most businesses most of the time

(09:34):
are very biased towards not raising prices. If the situation
gets dire enough and they've run they've exhausted all of
their non price based mechanisms for dealing with bottlenecks what
are called bottlenecks in the supply chain, Like they just
don't have enough of the inputs that they need in
or to sell enough stuff at assert at their normal
price in order to make enough revenue to socially reproduce

(09:57):
themselves and their supply chain. Of evidentially, they will exhaust
all options and there will be one person who's kind
of like the progenitor price increaser. And because like every
single and like, what is inflation really, it's a general
rise in prices. What are prices? Prices are things that
people themselves inside of firms, it's their job to set

(10:20):
and so any theory of inflation needs to start with
a theory of price essentially, and like, so these managers
whose job it is to set prices, when they change prices,
why did they do it? Well, we have answers going
back many decades, almost a century of the surveys of
economists who have gone out and actually conducted surveys asking

(10:44):
under what conditions would you raise prices? And at no
time did anyone say, oh, I raise prices because I
looked at monetary aggregates and I saw that there was
too much money, so I raised prices that and so
like that was kind of a starting point for me
when I read those these surveys conducted by Gardner Means,

(11:05):
who is an economists and doing this work in the
twenties and thirties long. If I don't burrow, I got
really excited because I'm like, oh, of course, well, of
course it's if inflation. There's so much mysticism about like
piles of money building up, and then it's like demand
pull and cost push, and like what does this all mean? Right? Well,

(11:26):
at the bottom of it, it's what are pricing managers
doing when they make that fateful decision to be the
first guy to raise prices? Because there is one. It
has to start with someone, and it's usually, like I
was saying, they've exhausted all of their other methods of
dealing with this, such as rationing inputs or economizing like

(11:49):
increasing their efficiency and their production, or diversifying their product
lines and all this stuff in order to maintain customer
goodwill throughout a period of of his coal stress to
the supply chain, and they're just going to raise prices
because they have to get a certain amount of revenue
in order to make it as a business. So that's
essentially what the supply chain theory is is that when

(12:12):
that happens, it propagates along supply chains first and then
because nowadays our economy is so extremely integrated, it's not
just one supply line. It's an entire supply chain network nowadays,
and it's global in scope, so even if it can't
it's it's increasingly less constrained to just like one industry

(12:33):
or even one country these days.

Speaker 2 (12:37):
That was a that was a beautiful explanation. That's that's
probably the most concise that we've that we've accomplished yet
at boiling it down. I'll just because this is the
problem is that we could go on for like thirty
minutes about this. Yeah, just this. I guess I have
a couple of things to add that are just like
digging out a couple of nuances that I think are

(12:58):
important for listeners to stand. What Steve said about inflation
being about a continuous general increase in prices is really
really profound. I think the first person to articulate that
I'm aware of was John K. Galbraith in an essay
that he wrote about that, but in like the fifties.
But like, that's honestly not the way that we usually

(13:23):
think of it, right, Like, usually we think that inflation
is when money, the value of money goes down value
money buys you less than it usually does. And that
is not just because that's how we experience it in
our pocketbooks. Everything else is just scott more expensive. It
also has to do with the kind of history of
theories of inflation, because back in the day, the first

(13:45):
and og theory of inflation, which people still some of
them believe in, is the quantity theory of money, and
it basically envisions like the entire economic universe as a
bunch of like atomized individual agents. And by the way,
there's no like distinction between companies and households or anything
like that. Here, everyone's kind of like funny, everyone's an

(14:05):
individual agent. And there's a bunch of stuff that already
exists out there in the economy. How it was produced,
I mean, you deal with that in a production function.
Other than that, like you don't talk about it. So
there's a bunch of existing stuff out there in the economy,
and it's scarce, right, so like how is it going
to be distributed? Well, we're trading the stuff that we
have for the stuff that we need. And when things

(14:27):
are more scarce, they're more valuable. When things are more abundant,
they're less valuable. And when we want them more they're
more valuable, we want them less, they're less valuable. So
that's kind of like like the very basic universe that
they're kind of like operating in. And money was just
seen to be one one good being traded like any other.

(14:53):
It just so happens to be the one that we
trade in exchange for everything else. So rather than doing
barter like like of every thing, you know, this many
chickens for this amount of haircut, you know, like, instead
it's like, you know, we choose one thing to be
exchangeable for everything else, but it still has a value,

(15:13):
which is basically determined, according to this theory, by how
much of it there is. So if you increase the
money supply, money gets less valuable, which is why you know,
everything becomes more expensive, prices go up. Whereas if the
money supply shrinks, you know, then the value of money
is higher relative to the goods that it buys, so

(15:35):
therefore prices will go down. This was the theory that
was developed in like the sixteen and seventeen hundreds to
try to explain a massive global inflation that happened then
in the so called price revolution of the seventeenth century.
And frankly everyone by the twentieth century knows that there's
huge issues with this, so they start trying to evolve

(15:56):
away from it, away from the quantity theory of money,
because it has no real empirical basis. I mean, some
people tried to kind of like you know, juke the
stats to make it look like there was but like, really,
our best estimates of the money supply have no real
good correspondence to prices in the economy. It's not it
doesn't really work that way.

Speaker 1 (16:14):
So yeah, this is this is the sort of modern
version of this is called monetarism, which is like that's real. Yeah,
And this is like, this is maybe the only thing
I have ever seen, even like most neoclassical economists drop
because it's empirically wrong, like it's stunning, Like you do
you know how wrong something has to be for neo

(16:34):
classical economists to go, wait, hold on, maybe this isn't right,
like I it's it's incredible.

Speaker 2 (16:42):
But the problem is that they retreated into theories that
are not necessarily right either. Yeah, perhaps perhaps groping their
way clumsily towards the truth, but not really that right.
So this is this is where all that pull and
push stuff comes in, and it's it's it's a little
too technic to get into. Steve's essay has like the

(17:03):
full version of it, but basically they started evolving away
from a theory where the absolute amount of money in
the economy is what matters most, and towards theories where,
for example, it's the amount of money relative to the
goods that can be bought by it. So if you
have a bunch of people spending money to buy stuff,
but there's not enough stuff to meet that demand. Then

(17:26):
that will basically mean that there's like scarcity and shortages
and things like that, and that will cost prices to
go up. Although why they do, like the underlying microeconomics
of why prices go up when they're shortages and stuff,
this theory doesn't really address because it's a macro theory
and it'll kind of like fall back on supply and
demand stuff or various kind of weird hydraulic metaphors about

(17:48):
like well god, yeah, yeah, yeah, you know, it's so
it doesn't really like like you know, different people will
have different versions of this that have totally differ and
explanations of why it's happening, but they'll generally say, if
you look at the economy as a whole, if the
stuff that's being made is less than the orders being

(18:08):
put in for it, then that causes inflation because you're
just not producing enough stuff. And they call that demand
pull because the poll of basically it's like demand pulling,
you know, for stuff that isn't being produced, so it's
like okay, well that that causes price rises. There was
a parallel development where they're trying to get away from
the QTM another way where some people were like well,

(18:30):
what's the most important single cost for businesses across the
economy And they say labor obviously, right, like everyone needs
to pay somebody to do wages to keep the business going.
So they just said, okay, well, if the cost of
labor goes up across the economy, then that will cause
prices to go up. So that's called cost push, which

(18:52):
now theoretically this could be true of any cost. And
this is kind of like where you know Steve's theory
comes in is because it actually like starts talking realistically
about what the cost of businesses are. But originally this
was again a macro theory, so they picked the one
cost that's common to all the things in the economy
and they said that basically, inflation is the cost of
workers agitating for higher wages, which leads wages to go up,

(19:13):
which causes cost push inflation, the cost go up, so
that pushes puts pressure down the supply chain because it's
it's a cost for everybody downstream of it, so then
it causes it to the prices to go up. Now,
the problem with these theories is that like they're very
like rigid. It's like it has one cause and it's
also like, you know, and it's this one thing and

(19:36):
it has to operate across the entire economy. Right, But
that's not actually how our economy is put together. Because
our economy is not this general equilibrium produced by the
trading of individual agents who are buying cheap and selling
deer to each other. That whole universe doesn't really exist.
The universe that we actually live in is one where
businesses are not isolated. They're interdependent. Right Like the the

(20:01):
you know, the people who collect sands, you know, from
the earth and other minerals, feed into the factories that
turn it into glass, which feeds into the construction industry
that puts those glass well actually, no, sorry I missed
a step there. You know, it feeds into the factories
that turn that glass into windows, which then feeds into

(20:22):
the construction industry, which puts them into buildings that then
feeds into like real estate conglomers that rent it, which
then feeds into businesses and households that live there. Right Like,
that's the entire supply chain, and all those businesses depend
upon each other because they're each other's customers. So how
much glass do they make in the in the glass factory?

(20:43):
It depends on how much how many windows the window
factories that are all their customers order. That's what determines
how much they're gonna make. You know, this whole picture
of the world as supply chains is common sense to
anybody who actually like works a job, especially if they're
like in a man position where they have to maybe
be dealing with some of the supplier relations stuff or

(21:04):
customer relations stuff. Economists just don't talk about it. It's
not really in their models because their models are developed
from the ground up from this kind of like everybody's
just trading as individuals perspective. And that's a great deal
of the reason why Steve's theory is so powerful. Now.
A lot of this supply chain picture that I'm painting,

(21:26):
besides coming from the real world, it also came from
a particular heterodox economist that I wrote a very long
profile of called Frederick S. Lee.

Speaker 1 (21:34):
Before we get into Lee, we unfortunately do need to
take an ad break because capitalism. But do you know
what Frederick Lee would have hated, and it's this ad break.
We're about to do it, all right, and we're back

(21:59):
to talk about Frederically, he was very cool and them
very excited.

Speaker 2 (22:03):
Yeah, well, unfortunately started to the point. We're not gonna
talk a ton about him. The only really important thing,
so he was. He was a great guy. He was
an anarcho syndicalist. He was a lifelong member of the
i w W. He actually helped recover Joe Hill's ashes
from the federal government and properly bury them. That's not
in Part one of my profile, which is published. It's

(22:25):
in part two, which is coming up. But in addition
to that, he was also a great economic theorist, and
part of what he did is that he put together
the bits and pieces of this alternative picture of the economy, where,
for example, prices are not this thing that allocates resources
automatically through supply and demand and there and their price
changes are telling us what to how much to produce

(22:46):
and how much to consume, which is the kind of
like mainstream neoclassical picture. But rather prices are a markup
that businesses like set themselves. They're not receiving it from
the market. They set a price markup over their total
costs of production in order to get the money that
they need to keep the lights on and stay in business.
This all sounds very trivial, I know, but believe it

(23:08):
or not, in economics, this is like a revolutionary idea.
So then it's like, okay, well, if that's the way
that an individual company is, how are the companies linked together?
He basically comes to he doesn't call it this, but
to a supply chain view of the economy, especially in
his last textbook, which tries to create a model of
the economy as a whole, and he says that the
entire economy is basically just a circuit of supply chains.

(23:31):
It's all the businesses sort of linked up together, forming
a closed circuit that loops back on itself. And that
is the economy that we use to produce the goods
and services that just keep society going day to day,
week to week, year to year. So he Lee basically
had all of that and that was the main ingredient
that we used. But it was Steve who then took

(23:53):
that framework and used it to create a new theory
of inflation. Because if you have a world of the
supply chains, then it becomes very obvious that if prices
are gonna rise all across the economy, it's gonna be
because people's costs go up. So then the question becomes
why do people's costs go up? And the answer is

(24:14):
almost always what Steve called his progenitor price increase. This
this first guy who chooses to raise his prices if
and only if that person is even only if that
person is in the uh you know, in a position
in the supply chain where a bunch of people are

(24:34):
downstream of them. And that tends to happen when, for example,
an input that goes into the entire economy, like energy,
suddenly goes up in the price or becomes scarce, or
it happens when a natural disaster causes disruptions in a
couple of businesses that everybody else depends upon, or when
there's an adverse shift in the balance of payments, you know,

(24:55):
the the Let's say that the peso you know starts
becoming you know, versus the dollar. You know, the dollar
becomes much more expensive, So imports become much more expensive.
So any business that depends upon imports, you know, will
suddenly will suddenly have their costs go up. These are
the kinds of events that are like an external shock

(25:18):
that leads to arise in prices and keynodes in the
supply chain that because so many people are connected to
them as customers, their costs become more expensive, and that's
these costs increase travel across particular supply chains. So you
have to actually know how all the businesses are linked
together so that you can identify what the origin of

(25:38):
the stress was and see which particular supply chains is
traveling down. It's not this like this thing that has
to do with a single factor across the whole economy
or this or much less the amount of money that's
being printed. The amount of money is almost like irrelevant
in this situation basically. I mean, it maybe has relevance
inasmuch as, like you know, if people have the amount

(26:01):
of money in their pockets that they have, usually they
might start purchasing more things than can be produced at
this moment. But that's usually like like usually it balances
out in normal situations. The only reason why that would
be true is because there was some kind of disruption upstream,
so that what's normally produced isn't being produced, And so
you always have to look at the particular supply chains

(26:22):
and the kinds of stress that they might have. Did
I did I communicate that roughly? Right?

Speaker 3 (26:26):
Yeah? Yeah, that was a fantastic summary. I have like
a few small notes just to add to it in
the sort of survey of existing theories of inflation that
I did in the paper that JMEC like very ablely
summaries for us, like specifically for the cost push guys,

(26:49):
they I think they have a tendency to focus on
like mecrodynamic forces at work in the lens of cost push,
like partly because it is like it really it relies
on high profile fights between labor unions and companies that
the audience already kind of understands, and it makes a

(27:11):
lot of sense that you would go to union fights
in particular since they're like one of the big items
that they typically fight over is cost of living adjustments
built into their wage increases. And so that's like an
obvious like, Okay, if there is ever a time in
which academic forces would convene in to specifically to raise inflation,

(27:34):
it would probably be fought over like the cola adjustments,
cost living adjustments, and like the that leaves so much
of the story untold. Focusing on cola adjustments in these
union fights leaves so much of the story untold because
it's it's putting like what's really this incredibly interdependent, micro

(27:54):
based phenomenon onto the backs of like one union against
one company fighting over one contract, and the way they
make it work in like a lot a lot of
the modern interpretations of cost push in this macrodynamic sense,
the way they square, the way they square how it

(28:14):
gets from that fight to become a generalized inflationary episode,
which is what people want to know about, Like they
don't want to know about one well, they want to
know about politically about a union fight, but in terms
of the economics, they want to know about the inflationary episode.
The way they square that is that there's typically like
in what they call an information diffusional component to this.

(28:38):
It's where and that's a fancy way of saying people
learn about the outcome of the fight and then replicate.

Speaker 2 (28:43):
It monkey see monkey doo.

Speaker 3 (28:46):
Yeah. So one union fight or one or one company
backclash against a union fight, word gets out, it spreads,
and it's all over the place. And that's really like
when you look at the the economic history of the
data of inflationary episodes, although there are union fights going on,

(29:08):
inflation is not springing up specifically from those fights in
the way that they're describing.

Speaker 1 (29:13):
Yeah, and I mean, one of the things you can
tell this is obviously wrong is that they're just they're like,
at no point in the US's history has there ever
been enough percentage of the US population who are in
unions for this to mix, this to actually work, Like,
at no point even if you were to be really
generous to them and only look at union density and
like steel production, union density and stuff that are like

(29:34):
an important part of the supply chain, Like, it's just
not enough people, Like it can't it literally cannot be
true that it is purely like a union cost a
testment thing because they're just not enough people.

Speaker 3 (29:46):
Yeah. So in these models, one of the important tasks
that they've given themselves is to estimate the coefficient of
information diffusional content from these union fights and like, so
they will try to estimate that coefficient and thereby out
build a model that outputs what price increase we can
expect from like labor militancy if you're on the right wing,

(30:08):
or company price gauging if you're on the left wing.

Speaker 2 (30:12):
Yeah, and this is this is really just like a
perfect example. I think the Steve couldn't have possibly put
it better. Of the way that certain things that sound
super sophisticated and intelligent, because you know, you can have like,
you know, rather rather pink economists using this framework, right,
like you know, social democratic ones, you know. But the

(30:32):
thing is that, like it sounds really fancy to be
talking about like the district what was it the informational
informational communication coefficient or whatever like that sounds that sounds
incredibly sophisticated, right, but like, actually what it is is
that it's this kind of like Nutsoe story about how
the reason why price rises happen across the economy is
because people are picking union fights when like empirically, labor

(30:58):
economists often do this, like you know, the ones who
work for unions and stuff. It's like it is almost
always the case that wages lag cost of living, you know,
like significant, so cost of living goes up, and that's
why people at some point, usually years later, will try to,
if they're organized, agitate for for for higher wages to

(31:18):
catch up with cost of living. So like the causality
of it of cost push you know, probably is not
labor action. Like that's that's a sort of macro brain superstition.
But funnily enough, this is kind of like like the
devil is in the details. Because cost push as a
general framework ought to probably be the basis for any

(31:40):
reasonable theory of inflation, because the idea that it's costs
going up, that then whatever prices now stream of those
costs also go up, that is probably true. It's just
that you have to look at particular supply chains and
their costs and not just like their labor costs, but
all the costs that they have and what cost in
particular went up that affects those particular supply chains. Like

(32:04):
that's but that's a different story, and it's a story
that looks more like sieves and also a story that
looks more like what's been going on in the world
since twenty twenty.

Speaker 3 (32:12):
Some of the critics when my paper and subsequent papers
that we're we're on the same vein as this came out,
is saying that we're just conflate, like how are you
guys really different than the cost push guys that you're
critiquing for part of your paper, And it's really comes
down to this kind of macro brain mecrodynamic interpretation based

(32:33):
on just wages or just like one union fight. And
then some like people see it and just copy it
or something, and it's just to least so much of
a story, I'm told.

Speaker 1 (32:43):
Yeah, I mean, like I think, I think this is
like the strength of looking at it through a supply chain.
It's like you can have it, you know, it has
the what like for what for a normal person is
a really simple idea, but for an economist is like
unbelievably galaxy brain, absolutely impossible to comprehend idea that something
can have multiple causes at the same time, and those

(33:07):
multiple like those you can't literally just reduce an entire
like thing that's happening to exactly one driver, which you know,
you would think would be a pretty like not that
controversial thing. But then economists can't tell the difference between

(33:29):
a theory in which you can have multiple different things
that are working on a supply chain and a theory
where you can have like a thing yeah.

Speaker 2 (33:37):
Yeah, exactly.

Speaker 3 (33:38):
Yeah. So like in the COVID inflation that was that
transpired just after the first of these pieces of ours
came out, like it wasn't into full swing anyway in
terms of in terms of being like a national phenomenon
until just after like there, yes, there there would be

(33:59):
there's getting of the labor militancy upsurge happily, but does
like some people tried to light like the people who
were predicting no inflation, but then we started to see
a little bit of it, started to attribute it to
this like macrodynamic cost push story eventually of like well,
either like but you can you can tell that they

(34:21):
are kind of hedging because there will be there's like
a bifurcation of interpretations of it, like one is the
like it really is, just you can tell it's not
that strong of a theory because there are two like
diametrically opposed interpretations saying that like, oh, you'res this corporate
price gouging or it's workers causing inflation themselves, which like

(34:47):
if like James was saying, there's a lag typically associated
that workers are just trying to catch up with the
prices that were being raised by firms in order to
keep up with inflation they generate.

Speaker 2 (35:01):
Yeah, if actually, if we could talk more, I was
I was hoping that I could actually get into the
COVID inflation and it's caused us a little bit. If
that's okay with folks, because I not only because it's
important in itself, but because I think this was actually
one of our first successes as a magazine. So we
launched as a magazine in April I think it was

(35:22):
of twenty twenty two, but we've been working on the
magazine from like twenty twenty on, so like those two.
It was March of twenty twenty two, the that's right,
but but we'd been working on the magazine all through
like twenty twenty and twenty twenty one and twenty And

(35:47):
the thing is that Steve's Peace was kind of like
taking shape, and you know, we as editors, but then
also as people who were like helping with the research
and talking things out internally and talking with other people
outside the collective, we're all kind of like sort of
imbibing it and thinking about it. When COVID hit right

(36:07):
and one of the things that was rather magical, And
there is written evidence of this, funnily enough, not as
an article because the magazine didn't exist yet, but as
a Twitter thread that I made actually on March third
of twenty twenty one. And the reason I'm being so
specific about dates is because of what happened where we
and I was just summarizing basically conversations that we had

(36:28):
been having inside the magazine internally. You know, that was
when some of the news stories were starting to come
out about shortages that were being caused by COVID. So
most famously the chips shortage were semiconductors, which take like
a year to make, like from the moment that the
order is put in to the moment when the thing

(36:49):
is actually shipped, it's like a year. And if that
process is disrupted, you have to start from the beginning.
So the shutdowns in China shut down semiconductor production, and
actually I say China, but it was really China and Taiwan,
like because because the both of those places have major
chips companies, and the that basically screwed up chips production

(37:13):
for like as long as the shutdown happened, and then
after that at a lag of like a year at least,
and then that in turn caused a bunch of other shortages.
The fact that we were all inside meant that like
there was a huge problem in food, both in agriculture
itself and in food processing factories, you know, where the

(37:34):
raw products that we take out of the earth are
turned into the packaged you know, bits and bobs that
you know, go to restaurants or to you know, food
product factories and things like that, Like you couldn't get
people to work there, or if they did, you know,
and you tried to like pay them a sure or whatever,
they would get sick so they would stop production. So
there was a labor shortage in agriculture as well. Then

(37:57):
there was a container shortage right in in shipping, where
we weren't producing enough containers to actually ship stuff around
the world. And if you can't do that, well, everything
is made. Everything that somebody needs to make something is
often now made in another country or at least another
part of a country, you know, that's connected by trucks.
So if there's no containers, how do you get stuff

(38:17):
from one place to the other? And the answers that
you don't So they were just piling up like mountains
in the in the docks of various countries, including here
on the West Coast and the East coast. So all
of these shortages caused by the pandemic. Basically we're hitting
key sectors of the economy, right that everybody depends upon.
So transportation, everybody needs it, you know, semiconductors, a whole

(38:42):
bunch of manufacturing needs it. So that's why cars suddenly
got super expensive, is because the chips in the machines
that make the cars got more expensive and scary, and
not just expensive, it's scarce, like you just couldn't get them.
And then food everybody depends on, and you know, like
everybody buys groceries, restaurants needed, so restaurant prices went up.
So you can see how specific sectors having these problems

(39:07):
traveled down specific supply chains to produce the cost increases
that we all started seeing. But here's the thing. All
that stuff was happening from twenty twenty on. I did
this thread on March third of twenty twenty one. But
the thing is that at that point there was not
yet inflation. We predicted that there was going to be inflation,

(39:29):
and there was a lot of people, like including left wingers,
including heterodox economists, who got really angry about this because
for them, inflation fear mongering. You know, this was in
the context of the government printing out all the stimmy checks, right,
so inflation fear mongering for them is kind of like
something that a right winger would do, you know, by
saying the government's printing too much money, So there's going

(39:50):
to be inflation, you know, quantity theory of money stuff,
Milton Friedman stuff, the stuff that they had experienced in
the turn to neoliberalism from the seventies to the eighties. Right,
I understand, and that fear. But the thing is this
wasn't fear mongering. These shortages for very clear reasons that
were clear if you had the supply chain theory of
inflation framework, which unfortunately only we did because we hadn't

(40:12):
published it yet. Like you know, it was very clear
that these shortages were going to cause cost increases in
very well linked together, you know, nodes within supply chains
that we're going to travel down those supply chains and
basically be economy wide. So I said so because I
had a hunch that it was going to be true,
and that it would be a big deal if it

(40:33):
was true, for you know, validating these discussions that we
were having internally. So I said, some predictions. One, there's
going to be inflation in the next year or two,
potentially lots. Two it will be caused by cost increases
due to the chips shortage and COVID induced bottlenecks, and
agriculture and manufacturing three, they'll try to blame the stimmy
checks and attempt to implement austerity. Now, at the time

(40:57):
of that first tweet, inflation was at two point six percent,
which is like within normal bounds, although slightly higher than
have been before. By the end of that year, even actually,
I think just a few months later, it was at
four point seven percent, and in twenty twenty two it
would peak at eight point seven three percent, which was

(41:17):
like the most inflation that we've seen since the Crisis
of the seventies fifty years ago. Like, so we you know,
the first success that we had as the magazine, before
we even came out as a magazine, is that we
successfully predicted the biggest inflationary crisis since the Crisis of
the seventies, and not only predicted it, but predicted its

(41:38):
specific causes. Because as the thread kind of was continually
updated over the course of that next year, like you know,
people started looking digging in and actually, like a lot
of journalism was uncovering that precisely those bottlenecks were leading
to cost increases, you know, the and there were other

(41:59):
ones that were kind of added to it. So when
the Ukraine War started in twenty twenty two that increased
global inflation because Ukraine is the world's single biggest and
by a lot, supplier of wheat, which is a key
staple in diets across the planet. So the shortages that
were created by the Ukraine War, by Russia's blockades, and
also just by bombing and you know, the war disrupting

(42:19):
the labor market over there and all these other kinds
of things that meant that there was less wheat being exported,
which created bottlenecks in those supply chains, which led to
the global increase in the price of wheat, which led
to the global increase anything that uses wheat, bread, you know,
and other food products. So beer, actually, well I'm not

(42:44):
wrong about that, right, Beer uses wheat. I should actually
know that from any way. Bread, yeah, I think I
think so I had to do a double take there.
So anyway, the point is that this was like a
really big deal because like there were a lot of people,
including like in the Biden administration, who were denying that

(43:05):
inflation was happening even as it was happening, And eventually
they kind of shifted to a story where it was like, well,
it'll be transitional, because only demand pull inflation is real, right,
this is clearly a cost push thing created by these shortages.
But like demand pull is the real form of inflation
is when there's like too much money in people's pockets.

(43:26):
And that's not what's happening clearly, So we'll be fine.
You just have to wait, right, which is not Actually
the attitude that you have to take. Inflation is inflation
and like you know, the the if the causes or
these disruptions and supply chains, you actually, I mean, this
is like the really edgy take. You actually have to
spend more money in order to unplug these bottlenecks. You know,

(43:49):
It's far from inflation being a product of there being
too much money in the economy. You might actually need
to do government spending to for example, hire people, you
know and take extra steps for precaution for their safety
to unplug bottlenecks created by labor shortages. Or you might
have to like you know, rapidly invest you know, on
a large scale, almost as if you're in a war,

(44:12):
in order to create a new industry to like, you know,
to to replace something like containers that that that you
would normally import, you know, or something like that. So
like like these are these are the kinds of actions
that a more muscular approach to the inflation would have
would have been. But instead they basically just waited for
the supply chains to fix themselves, even when multinational corporations

(44:34):
and their boards of directors were begging the government to
actually intervene more, which is insane with economic planning, you know,
you would never expect to hear something like that, but
it was in the things like the pages of the
Financial Times.

Speaker 1 (44:48):
Speaking of the Financial Times, we do we do need
to take another ad break. Unfortunately. Yeah, do you know
what the Financial Times will not be doing. It's buying
ads on this show. Hasn't happened yet. Could happen, would
be very funny, but it has not happened yet. All right,

(45:16):
we're we're now back for ads. But yeah, I endeavored
to have better ad pivots. But you know, you get
what you get.

Speaker 3 (45:25):
Speaking of like what they could have done differently, like
they there's a whole World War two playbook essentially that
they just didn't chose, they're ignorant of, or chose to
ignore of, like a system of price controls, rationing, and
rapid redeployment of resources to to unstuck the bottlenecks along

(45:45):
and across supply chains on the domestic side to support
the warfront. There's no war going on for us directly
right now, but it could it could have easily been replicated.

Speaker 1 (45:56):
Yeah, and that's something I think is really interesting because eventually, actually,
like as the inflationary crisis sort of went on, like
you did see a little bit of people trying stuff
like this, like you saw Germany, if I remembering right,
Germany did these price controls on on, like natural gas
prices and stuff. But that gets into another interesting thing,

(46:19):
is which is that So Yeah, I think we should
get into a bit of this sort of like the
I don't know how you describe it, the mainstream adoption
of like a version of y'all's theory that eventually started happening,
that eventually started to push like some of this stuff, which, yeah,

(46:44):
I guess we should introduce another person who I don't
know the relationship between exactly what of your stuff she
read is sort of unclear. But one of the things
that happens in this sort of period is this German
economist name Isabella Weber, who wrote a like fine like

(47:06):
the mostly Reasonable book about I like try the economists
behind the like the reform period in the eighties and
China like started pushing well, actually, this is some thing
where I'm sort of unclear at the timeline. I started
pushing the greedflation thing, although she had a different name

(47:27):
for it. Yeah, I was wanting were talking about that
sort of whole thing because that was really interesting, sort
of like turn in the whole inflationary discourse inflation.

Speaker 3 (47:38):
Yeah, I think the prior so like prior to Waber's
piece coming out in the earliest phases of COVID in
twenty twenty and twenty twenty one, before there was any inflation,
there was a group of left wing like a fairly
large swath of like left wing academics, aggressives and liberals,

(48:01):
and also Biden, the Biden administration itself, saying that inflation
would be transitory and that we should it will if anything,
it would be moderate, but would come right back down
because like, supply chings are so much more nimble now
than they were in like the seventies and eighties, and
like liquidy sources are so much more plentiful that they

(48:23):
have so many Like I'm probably giving them too much credit. Actually,
I think they literally just were like, yeah.

Speaker 2 (48:29):
There was no because that I remember, like that would.

Speaker 3 (48:32):
Be basically have it because actually I'm filling the in
the blanks for them as I go. I think they
were just saying it's going to be transitory because it
hasn't happened. Yeah, and like when it obviously in late
twenty twenty two to through the middle of twenty twenty three,
when there was obvious evidence that that wasn't the case,

(48:52):
then they like really didn't, like they went like hard
to starboard and said, like, Okay, the inflation that we see,
it's because of corporate greed and it just reduces to
that now. Yeah, and so it's like a purely opportunistic
thing between of like the largest corporations. And then you know,
maybe later people saw that and did monkey see monkey do,

(49:13):
but it's it's because of them.

Speaker 2 (49:16):
And to be fair, like the tricky thing here is that, like,
so I'll preface this by saying that, like, you know,
and I think this is true Steve too, Like I
really respect us of Bella Vapor's work when it's good,
you know, and which is often you know, Like I
think that that she's a very solid heterodox economist who
has some really important refutations of mainstream ideas, and as

(49:40):
an example of the good stuff. For example, she actually
uh one of her one of the underrated aspects of
a paper that kind of pushes what is popularly known
as the greed inflation thing. The better part of that
paper is that it actually creates a map of the
current to today's supply chains in the US, like you know,

(50:01):
and and identifies the keynodes you know. And she's a
method called input output input output tables, which Steve and
I have written about and we're gonna write about it
more on the magazine. This is like the main tool
that you can use to do real economic planning.

Speaker 1 (50:15):
JMC has been sending me input output tables for like
seven years now.

Speaker 2 (50:21):
Yeah, I just scream about it.

Speaker 3 (50:24):
Yeah, I should make it clear. It's like the iotable
stuff is amazing, and I think I think people just
latched on to kind of really not like hardly the
most important part of your piece.

Speaker 2 (50:36):
Yeah, and that, by the way, I mean, I don't
know if she read Steve's piece or not, but it
is a huge vindication of Steve's piece, which came out
like a year and a half before, you know, because
because it's basically mapping the supply chains that Steve talks
about using io tables and saying, Okay, these are the nodes.
If prices go up here, everything downstream of them will

(50:59):
go up, and those the and and that basically hits
most sectors of the economy, like and knowing what those
nodes are is like super important because then you can
figure out how to protect them, you know, like that's
that's actually like one of the key things that you know,
one wishes that that that that governments were doing, it
would be one of the few useful things that they

(51:19):
could do in a situation like this, right, But unfortunately
there's another aspect of her work which is more and
this also comes from heterodox theory, but it's just not
good theory in my opinion. And it's this whole deal
with like, okay, inflation, with prices going up. So why

(51:39):
are the prices going up? Well, a lot of them
are going up because corporate management sees that everybody's talking
about inflation. Now, maybe their costs. They're not in one
of these sectors where upstream their suppliers are raising prices.
They're actually getting the same prices for their ingredients as always.
But because everybody's talking about inflation, they're expecting prices to

(52:03):
go up, right, so why not just raise prices, you know,
like like the and and so like. That basically ended
up that that that basically ended up being a theory
of like, well, a lot of the price rises that
are going up is because of corporate greed, and corporations

(52:25):
are always greedy. But a situation where people are talking
about inflation means that they can that they can basically
uh uh do a price get away with a price
rise that they wouldn't be able to get away with normally. Now,
there might be situations like this. I'm not even denying
that that's the case. Like there are clearly, you know,

(52:46):
based on a couple of journalistic exposes, some companies whose
costs have not really gone up, but they're raising the
prices opportunistically so that they can do higher payoffs for
the shareholders and upper management. However, as a primary ex
explanation for why the inflation happened, as an argument for
the main cause of the inflation, and therefore for what

(53:08):
the main solution should be, just slapping on price controls
and saying no, you can't do this. I don't think
that that's tenable, because there are clearly biophysical stressors in
at least the places that are experiencing them, that are
traveling down supplytions where if you slap price controls down,
that's not going to get you more chips that at
least not by itself, and in itself, price control should

(53:30):
be part of the picture, but that's not, especially in
situations where there is corporate greed sort of driven price rises.
But that's just not an explanation for everything. And some
of Weber's followers, not necessarily her, but some of the
people who are like promoting this perspective are doing so
again partly in order to avoid conversation, in my opinion,

(53:50):
about these kinds of biophysical bottlenecks and how they might
be they might be undone, and it's a huge issue.
One thing to kind of like conclude is that, like,
you know, this, this whole thing that we've been saying
about the supply chain as disruptions to the supply chain

(54:11):
as the cause of a progenitor and price increased by
people in the affected sectors, which in turn, through their
connections to a bunch of customers, leads to price rises
across at least sectors of the economy. That whole story
allowed us to kind of see all this. A lot
of the inflation that's happened in the world since twenty twenty,
we saw it coming, and we saw specific causes coming.

(54:35):
And now no less a capitalist institution than the imf
right has kind of been forced reluctantly, I would say,
in some ways to admit that, as Christine Legard said recently,
you know, energy played a significant role, then food kicked in,

(54:56):
and energy is now fading, you know. The now they
still make it about wages, right, I mean, that's that's
the thing that ends up happening in a crisis like this,
is that they do want to blame wage increases. But
it is quite clear that even the authorities have needed
to kind of admit that these specific, measurable biophysical crises

(55:21):
have been the source, the main source of the inflation.
And then a great deal of the of the battle
has been over who's going to kind of like who
who's going to have to narrow their ambitions for their
goals as a result of it, capital or labor. And
this is where I think VAPOR is on firmer ground,

(55:41):
not as an explanation for the inflation. But afterwards, the
after inflation is already kicked in, who ends up having
to quote unquote foot the bill, right is there's now
like less money coming in in these companies. So do
you give it to workers so that they can, you know,
since their money buys them less, you know, compared to

(56:03):
rising costs of living, you give them a little bit
more so that they can like kind of like balance
it out. Or do you give it to management? You know. Now,
obviously if it's management making the decision about what to
do with the company surplus, because we live in a
capitalist economy, that's a dictatorship with the big owners, guess
what they're gonna say, you know, And now you have

(56:23):
a therefore a class struggle, the distributional conflict that some
of the kind of traditional cost push theorists always talk
about between capital and labor over what to do with
these rising markups in firms. Now they would say that's
why the inflation happened. I think I would say, and
I think Steve would be in agreement with this, that

(56:45):
it's what happens after inflation, an inflationary crisis kicks in,
and then there's a battle between capital and labor over
who gets screwed as a result. I think that that's
kind of the way that we should think about a
lot of the labor struggles that have taken place since.

Speaker 3 (57:00):
Yeah. I also like to add that there's kind of
like a distinction that needs to be drawn between like companies,
typically small and medium sized ones within who exist within
larger supply chains, who are sort of like doing what
they must, versus large corporations, often multinational who there's documented

(57:24):
evidence that yes, there's some opportunistic price price increases that
they are administering at the same time. So there's a mixture,
i would say bias towards the former group, those who
have to do what they have to do in order
to socially provision themselves. But there's a mixture of them,

(57:45):
and so you have to look at like that, who
are the price leaders and are they opportunistically raising prices
and are people copying that? Yes? Sometimes, But as far
as like the progenitor price increase that we keep talking
about it, you know, in our pieces like that very
often like and this is born out in the surveys,

(58:07):
like when they were asked like for their reasoning as
to why they raise prices. It was typically like for
the for reasons like that are quote unquote socially acceptable
at least to say, And for the most part, they
were just defending their margins, like they they were at

(58:27):
risk of going under, right, Yeah, and so you have
to you have to weigh there's a dynamic, there's an
interplay between those that group and then the opportunistic group.
And so it really doesn't like reduce neatly into the
greedflation sort of like bestardization of vapors. Otherwise, really excellent
piece that goes through some like interesting ended output analysis.

Speaker 2 (58:52):
Yeah, and I think that like this is a really
important thing for listeners because I think a lot of
left wing listeners they if they ask what's inflation and
a left wing economist tells them because of corporate greed,
they'll be like yeah, but and and they might listen
to us and be like, well, it looks like you're
it sounds like you're defending corporations, And I would argue, no,

(59:15):
we're not. We're trying to understand the actual causes for things,
and we think that can actually help you because, for example,
if a company, let's say that you're in a company
that is part of this wave of unionizations where you know,
let's say you're a Starbucks worker and people want to
start up a Starbucks union. Maybe one of the ways

(59:37):
that management is trying to kind of like screw over
your union is to tell people who are on the fence, well, like,
the reason why there's so much inflation is because of
these unions, like we have to all stick together, and
you know, the company's got your best interests at heart,
so you like, don't join this union that's going to
be pushing for for wages that are ultimately just going

(59:59):
to get not by inflation. Like, let let management figure
out what'll what's best, because otherwise you'll just end up
screwing up the whole economy. And which is not unheard of.
You know, it might be something that they'll fall back
on in negotiations and their anti union propaganda. If you
know that the actual cause of the inflation has to
do with disrupted supply chains and that really the question

(01:00:22):
is who's going to be screwed over and who's not
Within the company, you can go back and say, hey,
wages are always chasing. Cost of living increases. The cost
of living increases happened before the big unionization wave kicked off,
and we can tell that it's specific causes in logistics,
and its specific causes in chips, and specific causes in
agriculture that are causing the price of this, that and

(01:00:43):
the other thing. You can even map out your company's
supply chain and maybe point out certain cost increases that
caused it, and you can say, okay, so we're going
to have to raise our prices. But where's that money
going to go. Not all of us should go to management,
Some of us should go to us. So this is
what a materialist understanding of how the actual causes of
the thing worked out can help you in organizing your

(01:01:03):
workplace and in pushing back against the kinds of things
that your boss might try to tell you. So that's
that's what I would say to somebody who's like, well, well,
you're just defending corporations. No, I'm absolutely not. But I
don't think that we can actually have power, we can
actually kind of like take direct actions that really matter
because they're actually going to make life better for us
and our friends and our loved ones. Like, I don't

(01:01:26):
think that we can actually do that unless we understand
how the world works and sometimes the world works in
a way that doesn't necessarily look like we would most
expect it to or most wish it to. But nevertheless,
you have to kind of see how it works so
that you can then figure out what's the best intervention
that I can make into it, given where I'm at,
the institutions that I work through, the coalitions that I

(01:01:47):
can put together, and that kind of thing.

Speaker 1 (01:01:50):
Yeah, and I think this is a kind of like
left field, like take on this too, but like there
are lots of sort of you know, if you go
through through like an economic price history or like an
economic history of like the socialist period in China, right,
like you will find them having to deal with like
basically exactly the same shit where they have these like

(01:02:12):
massive inflationary spikes that have to do with like basically
these I mean for them, it was less supply chain
bottle like supply chain breakdowns is like you know, they'd
get the supply chain bottle next. They just didn't have
way through them. And like people fucking that up, Like
there was a like there was a decent argument that
like that's part of what caused the Great Leap forward

(01:02:33):
was people not fucking understanding that like not quite understanding
how to like deal with their supply chain stuff and
seeing this kind of like inflation like issue kicking in
and being like fuck it were to do something that's
completely nuts, and you know, that went like about as
badly as like any attempt anyone has ever tried to do,

(01:02:55):
like to fix any problem has ever gone. And the
larger the number of people who actually understand how this
stuff works, even in sort of like you know, even
even on a kind of like not enormously grandeur level,
the more likely you are to have someone who's in
and it has the ability to make a decision where
this stuff matters and you know it and like yeah,

(01:03:18):
you could be like, oh, well, like the odds that
we'rever gonna be in a place where this matters is
like directly you're gonna be the one making decisions pretty low.

Speaker 3 (01:03:24):
But like, you know, it's not zero.

Speaker 1 (01:03:25):
It's happened to people before, and them not knowing about
it was like a really apocable disaster, and we can
you know, avoid doing stuff like that by having a
better understanding of like how our supply chains function and
what effect that has on sort of economic distribution and
stuff like that. So Yeah, that's that's one of my

(01:03:46):
two pitches. And my other pitch on this is, I
I don't know how. It's hard to actually gauge the
influence of discourse on policy makers, especially when they're as
opaque as like the chairman of the Federal Reserve, but
it is worth noting that we didn't get a like

(01:04:09):
Vulcar style fifteen percent like interest rate increase, And I
think there's a there's a non zero argument the fact
that there were other alternative explanations to inflation like around
and that enough people were pushing them, like is a
reason why we didn't get one of these, like a
Vulcar style thing, which would have pushed employment to like
unemployment to like twenty five percent, destroy the entire global economy.

(01:04:32):
And that, you know, like we could count that as
a fucking w because as as bad as things are
right now, like the world, the world where Jerome Powell
pulls the trigger and hits the like hey, I'm now
a monitorist, like I'm gonna I'm gonna decrease the money
supply button and Jack's the interest wrapped like fifty percent,
Like that world is so much worse than this one.

(01:04:55):
It is it is difficult to imagine.

Speaker 3 (01:05:00):
Yeah, I think we dodged a bullet of like the
twelve percent federal funds rate this time. Yeah, we've surpassed
Monturism to an extent. Anyway, they're still doing some quantitative tightening. Yeah,
but I don't know, at least as like a mortgage
industry professional, I'm kind of hoping he keeps it under
six for the federal funds, right.

Speaker 1 (01:05:25):
Yeah, I mean, we'll see what happens there. But it
hasn't been we haven't gotten the apocalyptic reaction that like
we very very easily could have, like to the extent that, like,
I'm pretty sure if this, if this had happened under Obama,
we'd be in like a recession that would have made
two thousand and eight look like a joke right now.
So yeah, Okay, I.

Speaker 2 (01:05:47):
Think that there's a lot more to discuss about it
because and it seems like we're gonna probably have a
part two to this at some point. Yeah, So we
can probably get into it there because we have actually,
when I say, the public about interest rates, which hadn't
even bigger influence than this, Yeah, than these early essays
that we're talking about. But but you know, like, at

(01:06:09):
the end of the day, I think that what's important,
what's most important about what we've discussed is this for me,
like having this model which we developed, you know obviously
like steve've developed it out of as an expansion of
the logic of Fred Lee's work. And fred Lee was

(01:06:30):
not actually particularly original. He just synthesized a whole bunch
of stuff that existed previously, like these pricing studies by
Gardner Means in the thirties and pricing studies over the
next hundred years from all sorts of different people, you know,
into his post Kanteene price theory and stuff like that,
the cost plus markup stuff. But like like having a

(01:06:54):
theory that's developed by looking at the world and building
your abstractions up out of things that you can see,
particularly in a field like economics that's so complex that
you have to kind of start with like observable relations
between actual institutions that exist in the world that empowered us,
you know, that allowed us who really were just like

(01:07:15):
four weirdos started a magazine right like for anarchistish weirdos,
But that allowed us to see earlier than like most people,
including a lot of like credential professionals, what was going
to happen in the future, at least the near future,
like you know, the next like like like two to
five years from that vantage point, which was like twenty

(01:07:35):
twenty one. That is really incredible, And I'm not saying
that to brag, like, although it is certainly something that
I that I take a sick pleasure in. It's also
informative because think about all the things about which we
don't have that concrete material picture. The question of how

(01:07:56):
we're going to get fossil fuels out of agricultural production
without causing famines, right, the question of what do you
do now that we have the Internet, Like how do
you govern that? Because it's clearly not working under these
giant vertically integrated media oligopolis with the platforms, But it's
also not going to work if we put it under
the government, So what the hell do we do about it?

(01:08:18):
You know? It's it's like like there's all these key
questions that we just don't have even like working models
of like of like what the world is even like
right now much less like you know, what could plausibly
be done with it right to make it a better
place And obviously, Like, you know, some of this sounds
like stuff that the government should do, but a lot

(01:08:39):
of this is actually stuff that social movements need. If
you think the rent is too dam high in your city,
and you organize a tenancy union that has real political
muscle and you actually like have the ability to do
stoppages or other actions that can really like bully the
local city government. Okay, but what do you ask for?
What do you demand or what do you try to
put into place yourself using your own money? Like, what

(01:09:01):
do you do if the rent is too damn high?
How do you get it lower? And it's like, oh, well,
there shouldn't be rent, we should have abolished it. Okay,
how do you do that? You know, you need models
of the world, and that's what we've been trying to
kind of build in the magazine more than anything else,
especially in our ECON coverage. So there's a lot more
that happened after this. We'll probably have a part two,

(01:09:24):
but I just to wrap up the story up to then.
So we did launch the magazine, we did put out
Steve's essay, but then a really remarkable thing happened, which
is that we started getting like all magazines do people
who came in into the slush pile who were inspired
by Steve's work, and we're like, this makes the most
sense of anything that I've heard, and I want to

(01:09:45):
build on it too. So we started publishing other essays
that we're kind of building on the research program that
Steve kind of got us started on. And although our
sort of influence was difficult to calculate in terms of, like,
you know, how much we influence the discussion, you know,
in these early stages before the magazine was even up
and running. Afterwards, after we kind of publish the people

(01:10:07):
that I'm talking about, some of those pieces have actually
definitely influenced the conversation in really exciting ways, and I
think that we can talk about some of that next time.

Speaker 1 (01:10:15):
Yeah, so that will be at some point in the future.
I don't know, I'll lock up put down a definitive
date when it happens, because I don't know. The world
is chaos and this. Yeah, but however, Comma, this story
will continue in part two dot dot dot dot dot Yeah,
So Steve Jamc thank you both so much for joining me.

(01:10:37):
And yeah, do you have where where where can people
go to find the magazine? And you two if they
want to find.

Speaker 3 (01:10:44):
You, Oh, you can go to strangemags dot coop. That's
our main website. If you want to subscribe, we have
digital subscriptions starting at five dollars and Prince monthly is
seven ninety nine. They're also annual subscripts too.

Speaker 2 (01:11:00):
Yeah, and please do consider subscribing or donating. You can
actually donate any amount of money to us. We're not
a nonprofit, so it's not tax deductible, but it would
be a really helpful donation because any dollar that we
get that doesn't go to our capitalist overlords, you know,
for for the services that we have to use to
keep the magazine going, all of that goes right now

(01:11:21):
to our writers. And we try to pay our writers
above market rate for magazines of our size, and you know,
to do that is very difficult, you know, we need
we need to. So if you want to support worker
controlled media production that's financially independent, we don't have any
big foundations, you know, like telling us what to write

(01:11:42):
or things like that. It's all like basically small donations
and subscriptions, like you know, if you want to keep
that kind of media alive and keep this kind of
economic analysis alive along with our cultural philosophy, philosophical, historical, anthropological,
literary stuff. Then please consider it because we could really
use the support.

Speaker 1 (01:12:02):
Yeah, so go do that. Yeah, and go read some
of the some of the work that you all have
done on inflation because it's really good. And yeah, this
is prediculate. Appened here. You can find us in the
usual places. And yes, go go, go into the world
and cause mischief.

Speaker 2 (01:12:27):
It could happen here as a production of cool Zone Media.
For more podcasts from cool Zone Media, visit our website
cool zonemedia dot com or check us out on the
iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts.
You can find sources for it could Happen here, updated
monthly at cool zonemedia dot com slash sources. Thanks for listening.