Will impoverishing the 99% tackle inflation?
In the U.S. the progressive politicians, e.g. Bernie Sanders and etc, propose an excess profits tax on corporations that hike prices opportunistically. Another measure that follows logically is price controls and rationing. And still another would be income smoothing, increasing the in-kind benefits and cash benefits to lower income households, while taxing the higher incomes at 1950 levels. We need massive public housing and related expenditures in the U.S. for low income households. The distribution of income and wealth necessitate the use of unconventional methods. In the U.S. the top 1.5% who earn more than $500,000/year, earn 22.7% of all income, and the lower-earning 60%, with incomes below $75,000/year earn 20.3% of all income (Congressional Joint Committee on Taxation, 2022, Overview, page 36). It's not hard to imagine enacting measures to even-set the income ratios and also provide comfortable living conditions when the nation is so wealthy, and probably same for the UK. How much savings does anyone need before the state can ethically start taxing that savings? Maybe $20 million, maybe $10 million. A super-abundance of resources are wasted as private savings, there's a socialistic thought.
Such a lovely piece of clear writing that cam was a cool breeze on a very hot morning. Thank you.
Ann, if you believe central banks low interest rates and QE are not the primary cause of inflation, I don't see the point in following you anymore, I thought you had credibility from the your financial crisis claims, but you clearly don't understand the underlying problems. If inflation is a tax on savings, the only way to counteract that is higher interest rates than inflation, this is true for ANY point of human history. I don't disagree the poor will suffer, but a lot less than runaway inflation.
Ann, you are onto something important here! But I am not surprised by BoE comments. Most of econ staff have thorough training in IS/LM frameworks: No space for globalized financial markets in that playing field!
Yes it's finance, always dominating finance, that is at the root of our economic problems. And the core of that dominance comes from their monopolistic paradigm of Debt Only as the sole form and vehicle for the creation of money. Change that by strategically integrating a new paradigm concept of Monetary Gifting into the economic process and all manner of problems are resolved, abundance will result and ethics and rationality will finally come to economic theory.
For instance, along with the 50% Discount/Rebate policy I've mentioned before what if we implemented a 10-50% debt jubilee policy at the point of loan signing. Debt jubilees were occasionally utilized by the ancients (until the Roman empire) to reset economies and insure social cooperation and fidelity. Only problem was the personal/private debt always kept coming back. So why not be smarter than the ancients (instead of dumber like now) by integrating debt jubilee/monetary gifting directly and continuously into the economic process???
This way a $40k gas powered auto would be reduced in price at retail sale to $20k and then with a 10% debt jubilee by an additional $2k at loan signing to make its cost $18k, and a $60k Tesla which would get a 50% debt jubilee would end up costing $30k at retail and $15k at point of loan signing.
This and the other policies of the new monetary and financial paradigm make the economic system serve humanity rather than having 95-99% of humanity serve the system. It's not only the route to industrial capitalism, but industrial capitalism aligned with, guided by and sovereignly directed by the natural philosophical concept of grace as in love in action.
This is not some gross moralistic dictum, but the recognition that love/graciousness was actually the primary reason why humanity came to evolve self awareness and thus morals and ethics (which is the rational consideration of morals).
In fact an aspect or aspects of the natural philosophical concept of grace has been the major effect of all historical paradigm changes. For instance, 1) Awareness of self and thus logically the self awareness of all others, and consequently the enabling the reality of love and so ethics and morals and 2) The increased abundance resulting from the change from nomadic hunting and gathering to agriculture, homesteading and urbanization)
The new monetary paradigm: Too resolving of Finance's dominance for them to countenance, too universally beneficial and temporal universe reality inverting not to be a mega-paradigm change.
I love reading your newsletter, but I am still lacking some information about how speculation works in the international markets. Would you mind explaining a bit more?
And if high interest rates are not going to solve the crisis, then why on Earth are we still looking at Phillips Curve, the way God looks at his Disciples in our economic textbooks?