Have you noticed that when workers get better wages, the media blames them for rising prices, but when corporations rake in record profits, there’s silence?
That’s because corporate profits aren’t tracked nearly as closely as worker wages. And the reason why comes down to power.
Every month we get measurements of prices, jobs, and wages — these are the three economic variables we hear repeatedly because they are released each month like clockwork.
There are four economic wildcards between now and the election, and we know exactly when each will be played.
The first is this Wednesday at 11.30am eastern time, when we get the official update on inflation. We’re likely to see a figure so large it will take many of us back to the 1990s, to a time before anyone under 30 was born.
With the exception of a short-lived blip following the introduction of the goods and services tax in 2000, inflation has scarcely been above 5% since 1990.
One of the stranger things about the Reserve Bank’s announcement of why it’s lifting interest rates by 0.25 percentage points is that it suggests inflation will come down by itself.
“A further rise in inflation is expected in the near term,” the RBA says, “but as supply-side disruptions are resolved, inflation is expected to decline back towards the target range of 2-3%.
So why raise rates now, for the first time in more than a decade? The bank says it is about "withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic”, which is fair enough.
But our latest burst of inflation is weird, and resistant to rate hikes. If the Reserve Bank isn’t careful, too many more rate hikes like this might help bring on a recession.
The biggest question relating to the management of the economy right now has nothing to do with next week’s budget. It has everything to do with the Reserve Bank and the board meetings that will follow it.
The question facing the board – the biggest there is when it comes to how the next few years are going to play out – is whether to hike interest rates just because prices are climbing.
On the face of it, it seems like no question at all. It is widely believed that that’s what the Reserve Bank does, mechanically. When inflation climbs above 3% (it’s currently 3.5%) the board hikes interest rates to bring it back down to somewhere within the bank’s target band of 2-3%.
Inflation is a cover corporations are using to squeeze more money out of you. But as I’ll explain, there are five things we can do to fight back.
Corporations are using inflation as an excuse to raise their prices, hurting workers and consumers while they enjoy record profits.
Prices are surging – but let’s be clear: corporations are not raising prices simply because of the increasing costs of supplies and labor. They could easily absorb these higher costs, but instead they are passing them on to consumers and even raising prices higher than those cost increases.
Corporations are getting away with this because they face little or no competition.
It’s not just the Big Lie. Republicans are telling three other lies they hope will swing the midterms.
They involve crime, inflation, and taxes.
Here are the GOP’s claims, followed by the facts.
1. They claim crime is rising because Democrats have been “soft” on crime.
Rubbish. Rising crime rates are due to the proliferation of guns, which Republicans refuse to control.
The Federal Reserve has been hellbent on raising interest rates to slow the economy. It’s a huge mistake.
You know who bears most of the pain of these rate hikes?
Most of the pain is borne by people who are already struggling to keep up with rising prices: lower-wage workers and the poor.
While the Fed has signaled that its interest rate increases might not be as drastic moving forward, the important thing to remember is that these hikes already fail to address a major driver of inflation — powerful corporations that are ratcheting up prices to pad their profit margins.
Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.
In the US, figures released last week showed the consumer price index surged 6.2% in the year to October, the most since 1990. So-called “core” inflation (which excludes volatile prices) climbed 4.6%, also the most for 30 years.
US underlying inflation