What’s Really Causing Inflation And How We Should Deal With It

While times have been getting harder for workers, it is clear that capitalists (or “big business”) have been doing very well. It would seem as though everyone is against inflation. But the real problem is not that prices have been increasing but that wages have not kept up with this. It is important to look not only at why inflation has increased but at the very different question of why wages have not kept up with it.

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The Real Antidote To Inflation

The Federal Reserve is caught between a rock and a hard place. Inflation grew by 6.8% in November, the fastest in 40 years, a trend the Fed has now acknowledged is not “transitory.” The conventional theory is that inflation is due to too much money chasing too few goods, so the Fed is under heavy pressure to “tighten” or shrink the money supply. Its conventional tools for this purpose are to reduce asset purchases and raise interest rates. But corporate debt has risen by $1.3 trillion just since early 2020; so if the Fed raises rates, a massive wave of defaults is likely to result. According to financial advisor Graham Summers in an article titled “The Fed Is About to Start Playing with Matches Next to a $30 Trillion Debt Bomb,” the stock market could collapse by as much as 50%. 

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Fighting The Inflation Profiteers

In a time of high inflation, you hear a lot about companies “passing costs” on to customers. In order for companies to maintain their God-given right to earn a profit, they must raise prices to offset the cost of producing goods and getting them into peoples’ hands. And thanks mostly to the hidden risk, exposed by the pandemic, of neoliberal gospels like just-in-time logistics, deregulation, and offshoring, prices really are going up.

But there’s something else mixed in with this latest bout of inflation. Companies aren’t just passing costs onto us. With corporations using inflation as a cover for raising their prices, you and I are passing profits onto companies.

“Executives are seizing a once in a generation opportunity to raise prices,” reads a Wall Street Journal story explaining that around two-thirds of the largest publicly traded companies are showing profit margins higher today than they did in 2019, before the pandemic.

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US Food Banks Struggle To Feed Hungry Amid Surging Prices

Oakland, CA — U.S. food banks already dealing with increased demand from families sidelined by the pandemic now face a new challenge — surging food prices and supply chain issues walloping the nation.

The higher costs and limited availability mean some families may get smaller servings or substitutions for staples such as peanut butter, which costs nearly double what it did a year ago. As holidays approach, some food banks worry they won’t have enough stuffing and cranberry sauce for Thanksgiving and Christmas.

“What happens when food prices go up is food insecurity for those who are experiencing it just gets worse,” said Katie Fitzgerald, chief operating officer of Feeding America, a nonprofit organization that coordinates the efforts of more than 200 food banks across the country.

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The Inflation Class War

When we hear the word ‘inflation’, it usually brings to mind the prospect of rising prices for basic necessities, things like food, fuel and transport. This kind of inflation comes in two types – cost-push and demand-pull.

Cost-push inflation refers to the ‘pushing’ effect of rising input prices somewhere in the supply chain. When oil prices rise substantially, for example, prices across the economy rise as oil is used to produce and transport almost everything. Effectively, rising costs equate to a contraction in the potential amount the economy can produce.

Demand-pull inflation, on the other hand, refers to the ‘pulling’ effect of rising demand on prices. Usually, there exists a gap between what could be produced if all the resources in an economy were being put to use as efficiently as possible, and the amount of output we’re currently producing: the output gap.

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Global Food Prices Post Biggest Jump In Decade

London – Global food prices have surged by the biggest margin in a decade, as one closely watched index jumped 40 per cent last month, heightening fears that the inflation initially stoked by pandemic disruption was accelerating.

The year-on-year rise in the United Nations Food and Agriculture Organisation’s (FAO) monthly index was the largest jump since 2011, as commodity prices surged.

The higher inflation will hit poorer countries reliant on imports for staple goods. For richer countries, the cost of raw ingredients accounts for only part of the overall price paid for products at supermarkets and restaurants. But the rise in raw material prices has been so steep that big firms like Nestle and Coca-Cola have said they would pass on any increases.

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Soaring Prices Push US Households To The Edge

Surging prices for necessities like used cars, phones, and housing have caused the biggest jump in “core” consumer prices in nearly four decades, according to new figures released Wednesday by the US Department of Labor (DOL).

Rising prices for food, heating oil, gas, and other necessities are eating into workers’ incomes both in the United States and internationally.

Workers are finding it increasingly impossible to make ends meet, even if they are employed full-time. The minimum wage in the United States remains at $7.25 per hour, and US President Joe Biden has reneged on his campaign promise to raise it.

Workers’ real average hourly earnings have plunged, falling 3.4 percent over the past year, according to the latest jobs report from the DOL, as companies used the pandemic as a pretext to slash wages over the past year.

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