On the one hand it seems that inflation harms consumers by higher prices, but on the other hand it favors debtors over creditors because if the value of a debt decreases overtime in real terms with inflation.
Then I think the Fed chair in recent years has often offered the threat of inflation as a reason to raise interest rates. Besides whatever anti-inflation monetarist logic, it seems to me that the interest rates are the price of money , and the Fed chair's main job is to make profits for the financial sector, the money lenders, which is based on the price of money.
And of course, it is quite suspicious when the panic button on inflation is usually pushed when wages go up. It just happens to stigmatize workers' economic gains. This is the "inflation is the workers' fault" part of this economic mythologique. Anyway, Marx wrote on this specific issue in _Value, Price and Profit_. It is an old bourgeois trick to claim that prices must go up when wages go up. No. Profits can go down, and prices stay the same. Wage hikes are not a necessary cause of inflation.
Inflation seems something of a political economic football in the U.S. as when Gerald Ford cheered us to Whip Inflation Now (WIN). Rah Rah.
I'm with Doug. What's up with the tightness of the labor market ? Full employment means the bosses have no one to turn to in a strike.
Charles Brown
>>> Doug Henwood <dhenwood at panix.com> 08/05/99 02:16PM >>>
Michael Perelman wrote:
>Doug says that inflation hurts the working class. As I understand
>it, you have
>to make a distinction between the segements of the working. The most marginal
>workers do benefit during inflationary bouts from more employment. Others may
>fall behind.
You're attributing more certainty to my position than it deserves. I'm questioning the traditional populist notion that inflation is good for the working class. The evidence of the last 30 years in the U.S. doesn't support this. That's why I'd prefer to focus on labor market tightness, which is much more directly relevant to the balance of class forces.
Doug