Inflation and the Class War

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 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 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,

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, 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 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

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 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 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 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

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 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. 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 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. 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 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

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 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 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 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 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 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, 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 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, 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 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 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, 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. 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 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 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, 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 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. 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 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 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, 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 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 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

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 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 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 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 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 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 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. 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 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 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, 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 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 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 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 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 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

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, 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 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, 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 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 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 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 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 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 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 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 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 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,

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.

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?

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

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 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 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 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

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 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, 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 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

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 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 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, 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 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, 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 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 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, 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 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 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, 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. 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 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,

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 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

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, 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 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

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 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 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

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 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 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 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

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

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 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 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 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 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 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.

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.

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 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

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. 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 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 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 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 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

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 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, 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 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 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, 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

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 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 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 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 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 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, 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?

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,

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, 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, 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

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 kind of show up to the factories and inflate your bosses and you will inflation will come down. Yeah, would

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