As I pointed out in the beginning, blaming greed, price-gouging, speculators, hoarders, monopolists, middlemen, and other witches for inflation goes back at least 1700 years.
We tend to become what we preach. Josh is making a lot of assumptions about how Harris isn’t going to act on her rhetoric. That doesn’t strike me as her track record.
She talked BLM and DEI, we got it.
She talked stimulus, she was the tie breaking vote on three massive stimulus bills.
She talked Covid and we got Covid.
She talked kids in cages and we got a bunch of illegal immigration.
“Inflation destroys nations and societies as surely as invading armies do. Inflation is the parent of unemployment. It is the unseen robber of those who have saved”. Margaret Thatcher
"The Democratic Party left has been wanting to 'go after' 'big corporations' for decades."
What I find alarming is that this is no longer a Democratic party thing or even a left thing. Even though all of this wankery about price gouging and greedflation and so forth is asinine and would make for terrible policy, it will have a lot of political appeal beyond just their base. I think the real question is whether the lip service actually translates into policy. After all, the only thing a politician loves more than a scapegoat is an empty promise.
(I'm also a bit disappointed that you made three posts about something stupid your partisan adversaries have said but haven't said a word about Trump wanting to have "a say" in Fed actions.)
All of the executive power of the united States is vested in the President by Art. II Sec 1. of the Constitution. Section 3 of that Article tasks him: "he shall take Care that the Laws be faithfully executed". He is the sole fountain of the power to prosecute. By law and presidential order that power has been delegated to the Attorney General and the United States Attorneys. But, they are the president's servants, and have no power other than that which has been delegated to them.
I am not defending Harris. She is a dolt who says doltish things. Lord protect us poor sinners.
TGE has taken "inflation" out of it's larger context here to try and prove a faulty argument.
The 1700 year old origin story is moot.
It matters not how long people have pointed at the origins of inflationary practices.
What matters today is that we are subject to monopolies that can get away with super-sizing their profits and using that ill gotten hording to initiate stock buy-backs and dividends.
COVID became an end-all-be-all get out of accountability card. Seriously.
For instance: $77-Billion for the top ten food producers and restaurant chains in the US. Food costs have exceeded 25% of common prices in 2020. Is that not inflationary? Doesn't matter, technically. What matters is that we are paying more for foods and it is not due to simple wages, supply and demand. This is "crapitalism" not capitalism.
The energy sector is worse still: The cash-rich industry has not shied away from deal making. Last month, oil giant ConocoPhillips said it would acquire rival Marathon Oil in a deal valued at $22.5 billion. That acquisition comes on the heels of ExxonMobil’s $60 billion purchase of Pioneer Natural Resources and Hess shareholders’ approval of a $53 billion sale to Chevron.
Over the last several years, big oil companies have used profits to purchase their own stock on the open market, lifting share prices. Notably, Chevron announced plans for a $75 billion buyback last year and Exxon said it would ramp up its annual pace of share repurchases to $20 billion per year.
I cannot see how people miss this readily available data when researching a story. Or, are the authors of government bashing economic propaganda intent upon looking only at the "causes" that serve their narrow thesis?
Prices have gone up, profits have gone up, but profit margins remain stable. [0] This is *classic* monetary inflation taught in high school: the profits your screaming about inflated too. Other evidence includes the price of everything jumping by about the same amount at the same time. Oil, gas, wheat, housing, metals, medicine, healthcare, digital goods, all experiences a 30% increase or more. Is there some corporate wizard orchestrating such massive collusion across our industries? Or maybe we should blame our leaders for injecting $5.7T unproductively into our economy?
1) Nixon took the dollar off of the gold standard in an attempt to thwart stagflation. Our free floating dollars have been easily devalued ever since.
2) The last time the US Government had a decent balance sheet was the year 2000 at the end of President Clinton's term. It didn't last long. G.W. Bush and his admin decided to have a war with Iraq based upon false pretenses. We are still paying for it via increased middle east conflagration and the US balance sheet that has been bleeding red ever since with Dem and GOP administrations adding to it. Dems via social programs and GOP/MAGA with tax cuts for the top tiers.
Blame our leaders? As if they're the only stakeholders creating this mess?
"Prices have gone up, profits have gone up..." Sorry, but this does not account for what is happening. COVID had many impacts relative to shipping and transportation of goods. Along with your "margins" ( BTW, 1-Billion dollars creates far more wealth than 1-Million dollars. "Margins" are not relevant here as a static symbol.) we have had rapacious cuts to taxes that favor the preservation of capital and hoarded wealth at the top, both individual and corporate. This is not sustainable.
I take issue with your comment that the $5.7T is unproductive as to economic works. This issue is not a simple either/or occurrence. We are far better off than other post-industrialized coming out of COVID. Yet I agree that this too is unsustainable.
Collusion? Yes. We all know that Corporate interests have been using vast sums of money running Washington DC in both monetary and social policy since the 1970s. Their influence goes back far before that, of course, but not to the degree we have this day.
More recently Citizens United, the rise of the Freedom Foundation and Heritage Foundation's influence had led to the inane inability of the GOP to actually govern conscientiously when in power and have all "colluded" to bring the economic system to it's knees. Just in time for the Project 2025 revamp.
Refusing to pass or pay bills has become a congressional cosplay for the MAGA theater of the absurd. But, when the GOP Clown in Chief is a world class cheat and felon I guess this is what happens. If he's elected again it will not get better because authoritarians only serve themselves, not the country/populace. Harris/Walz have not put forward a substantive economic plan yet so we have only suppositions– largely based in a recent history based fear of more debt.
To recap, our corporate and other vested interests in the Federal Government are pushing money to the top and taxes toward the bottom 90% as a misguided monetary notion like Supply Side Economics. This is crashing the system. The middle class is debt ridden. It will get worse because Social Security was based upon a system that had a middle class income scheme that rose along side inflation. That has not happened and the top tiers are tax averse (and powerful enough to remain this way) so the money is drying up. Not taxing Social Security will only inflate the deficit, so that is just more political garbage offered as today's "Let Them Eat Cake" moment from Trump.
Capitalism and the Constitution have remedies and answers to this quandary, but it is nowhere to be found in our system when the power is at the self serving top.
Please stop playing games so as to intimate that people on the "right" do not see this. All we consistently get from the Right is fear based propaganda with few actual answers that would guide the country into a more monetarily workable relationship between governance, debt and the governed. The nation is ready for real answers.
It's not just Kamalaism.....In this essay I ask: Are conservatism and capitalism falling out of love? I realise some conservative thinkers would answer that they never were in the first place (my own father was one such). But in modern times, the political/economic choice at election time could crudely be framed in these terms: Want more capitalism and less state intervention?....then vote conservative. Now this core belief in free-market capitalism is coming under serious interrogation in the liberal West for the first time since the 1930s. The proximate cause has been a growing public exasperation at the social stresses and downsides of what has come to be known as Globalisation. [Strictly speaking it would be more accurate to say ‘latest wave of globalisation’ as European imperialism was a kind of globalisation too.] The latest wave – as with previous ones - has been great for some; for others not so much. For Western populations, it has been great for consumers and at least some of the laptop classes but not so great for what used to be called the working classes. A simmering, visceral anti-globalism reaction has set in across the West.....https://grahamcunningham.substack.com/p/globalism-vs-national-conservatism
Loved the history lessons of the last 3 posts. But agree w J Barro that politicians have to pander, as attacking the Fed and its independence as some suggest would be stupid and could destabilize markets. As much as I find the whole price gouging distasteful, I would rather hold my nose, wait for a commission and its findings in 3 years, and then move on. We see that all the time in Congressional Hearings. The fact that most amount to nothing may be a feature of the system, and I am ok with that as it limits government activism (let them act tough). Bottom line: the price gouging pandering is certainly preferably than blasting the Fed, or insulting the chair and the Fed Board. After all, I hope Harris and the Ds in charge don't become the party that blocked Peter Diamond to the BofGs and had the pizza guy and the cable tv growth guy as nominees for the same board. We clearly live in a 3rd-best world where hopefully the price gouging bs won't do too much damage. I hope Grumpy will now analyze the policy prescription of tariffs (those easy to win trade wars...), mass deportations, and less independence for the Fed, and their combined effect on inflation. Add tax cuts and no spending restraint to the mix. The price gouging is the policy chihuahua that may or may not bark. What a strange world we live in...
John, thank you for your concise analysis of Ms. Harris's speech and policy. Appreciated, as always. There is nothing new under the sun. Unfortunately, we must endure several more months of the political rhetoric, but along with your Goodfella compatriots, we will somehow make it through...
When will 'mainstream' economists (yes I know mostly dems) call out this faulty logic and explain that going after poorly defined 'price gouging' just camouflages the decline in the value of money?
As Josh Barro puts it, to win, politicians have to pander!
https://www.joshbarro.com/p/i-said-democrats-should-pander-more
We tend to become what we preach. Josh is making a lot of assumptions about how Harris isn’t going to act on her rhetoric. That doesn’t strike me as her track record.
She talked BLM and DEI, we got it.
She talked stimulus, she was the tie breaking vote on three massive stimulus bills.
She talked Covid and we got Covid.
She talked kids in cages and we got a bunch of illegal immigration.
She does what she says she’s going to do.
Good arguments and exposition. I should be fine but I worry about our children and future people!
“Inflation destroys nations and societies as surely as invading armies do. Inflation is the parent of unemployment. It is the unseen robber of those who have saved”. Margaret Thatcher
https://convex-strategies.com/2024/08/15/risk-update-jul2024-chaos/
"The Democratic Party left has been wanting to 'go after' 'big corporations' for decades."
What I find alarming is that this is no longer a Democratic party thing or even a left thing. Even though all of this wankery about price gouging and greedflation and so forth is asinine and would make for terrible policy, it will have a lot of political appeal beyond just their base. I think the real question is whether the lip service actually translates into policy. After all, the only thing a politician loves more than a scapegoat is an empty promise.
(I'm also a bit disappointed that you made three posts about something stupid your partisan adversaries have said but haven't said a word about Trump wanting to have "a say" in Fed actions.)
That's next.
In the last four years Harris has followed up on her rhetoric. I think the default should be that she will follow through.
She's the VP. She doesn't have the ability to follow up on much of anything.
She was the tie breaking vote on trillions of dollars in spending and publicity endorsed the administrations policies
and how is it that he will Make America Affordable Again?
The opportunity cost of a Harris Presidency is significantly higher than the opportunity cost of Trump 2.
"The president is not a prosecutor."
All of the executive power of the united States is vested in the President by Art. II Sec 1. of the Constitution. Section 3 of that Article tasks him: "he shall take Care that the Laws be faithfully executed". He is the sole fountain of the power to prosecute. By law and presidential order that power has been delegated to the Attorney General and the United States Attorneys. But, they are the president's servants, and have no power other than that which has been delegated to them.
I am not defending Harris. She is a dolt who says doltish things. Lord protect us poor sinners.
TGE has taken "inflation" out of it's larger context here to try and prove a faulty argument.
The 1700 year old origin story is moot.
It matters not how long people have pointed at the origins of inflationary practices.
What matters today is that we are subject to monopolies that can get away with super-sizing their profits and using that ill gotten hording to initiate stock buy-backs and dividends.
COVID became an end-all-be-all get out of accountability card. Seriously.
For instance: $77-Billion for the top ten food producers and restaurant chains in the US. Food costs have exceeded 25% of common prices in 2020. Is that not inflationary? Doesn't matter, technically. What matters is that we are paying more for foods and it is not due to simple wages, supply and demand. This is "crapitalism" not capitalism.
The energy sector is worse still: The cash-rich industry has not shied away from deal making. Last month, oil giant ConocoPhillips said it would acquire rival Marathon Oil in a deal valued at $22.5 billion. That acquisition comes on the heels of ExxonMobil’s $60 billion purchase of Pioneer Natural Resources and Hess shareholders’ approval of a $53 billion sale to Chevron.
Over the last several years, big oil companies have used profits to purchase their own stock on the open market, lifting share prices. Notably, Chevron announced plans for a $75 billion buyback last year and Exxon said it would ramp up its annual pace of share repurchases to $20 billion per year.
I cannot see how people miss this readily available data when researching a story. Or, are the authors of government bashing economic propaganda intent upon looking only at the "causes" that serve their narrow thesis?
Prices have gone up, profits have gone up, but profit margins remain stable. [0] This is *classic* monetary inflation taught in high school: the profits your screaming about inflated too. Other evidence includes the price of everything jumping by about the same amount at the same time. Oil, gas, wheat, housing, metals, medicine, healthcare, digital goods, all experiences a 30% increase or more. Is there some corporate wizard orchestrating such massive collusion across our industries? Or maybe we should blame our leaders for injecting $5.7T unproductively into our economy?
[0]: https://dqydj.com/sp-500-profit-margin/
Remember a couple of things here:
1) Nixon took the dollar off of the gold standard in an attempt to thwart stagflation. Our free floating dollars have been easily devalued ever since.
2) The last time the US Government had a decent balance sheet was the year 2000 at the end of President Clinton's term. It didn't last long. G.W. Bush and his admin decided to have a war with Iraq based upon false pretenses. We are still paying for it via increased middle east conflagration and the US balance sheet that has been bleeding red ever since with Dem and GOP administrations adding to it. Dems via social programs and GOP/MAGA with tax cuts for the top tiers.
Blame our leaders? As if they're the only stakeholders creating this mess?
"Prices have gone up, profits have gone up..." Sorry, but this does not account for what is happening. COVID had many impacts relative to shipping and transportation of goods. Along with your "margins" ( BTW, 1-Billion dollars creates far more wealth than 1-Million dollars. "Margins" are not relevant here as a static symbol.) we have had rapacious cuts to taxes that favor the preservation of capital and hoarded wealth at the top, both individual and corporate. This is not sustainable.
I take issue with your comment that the $5.7T is unproductive as to economic works. This issue is not a simple either/or occurrence. We are far better off than other post-industrialized coming out of COVID. Yet I agree that this too is unsustainable.
Collusion? Yes. We all know that Corporate interests have been using vast sums of money running Washington DC in both monetary and social policy since the 1970s. Their influence goes back far before that, of course, but not to the degree we have this day.
More recently Citizens United, the rise of the Freedom Foundation and Heritage Foundation's influence had led to the inane inability of the GOP to actually govern conscientiously when in power and have all "colluded" to bring the economic system to it's knees. Just in time for the Project 2025 revamp.
Refusing to pass or pay bills has become a congressional cosplay for the MAGA theater of the absurd. But, when the GOP Clown in Chief is a world class cheat and felon I guess this is what happens. If he's elected again it will not get better because authoritarians only serve themselves, not the country/populace. Harris/Walz have not put forward a substantive economic plan yet so we have only suppositions– largely based in a recent history based fear of more debt.
To recap, our corporate and other vested interests in the Federal Government are pushing money to the top and taxes toward the bottom 90% as a misguided monetary notion like Supply Side Economics. This is crashing the system. The middle class is debt ridden. It will get worse because Social Security was based upon a system that had a middle class income scheme that rose along side inflation. That has not happened and the top tiers are tax averse (and powerful enough to remain this way) so the money is drying up. Not taxing Social Security will only inflate the deficit, so that is just more political garbage offered as today's "Let Them Eat Cake" moment from Trump.
Capitalism and the Constitution have remedies and answers to this quandary, but it is nowhere to be found in our system when the power is at the self serving top.
Please stop playing games so as to intimate that people on the "right" do not see this. All we consistently get from the Right is fear based propaganda with few actual answers that would guide the country into a more monetarily workable relationship between governance, debt and the governed. The nation is ready for real answers.
It's not just Kamalaism.....In this essay I ask: Are conservatism and capitalism falling out of love? I realise some conservative thinkers would answer that they never were in the first place (my own father was one such). But in modern times, the political/economic choice at election time could crudely be framed in these terms: Want more capitalism and less state intervention?....then vote conservative. Now this core belief in free-market capitalism is coming under serious interrogation in the liberal West for the first time since the 1930s. The proximate cause has been a growing public exasperation at the social stresses and downsides of what has come to be known as Globalisation. [Strictly speaking it would be more accurate to say ‘latest wave of globalisation’ as European imperialism was a kind of globalisation too.] The latest wave – as with previous ones - has been great for some; for others not so much. For Western populations, it has been great for consumers and at least some of the laptop classes but not so great for what used to be called the working classes. A simmering, visceral anti-globalism reaction has set in across the West.....https://grahamcunningham.substack.com/p/globalism-vs-national-conservatism
Loved the history lessons of the last 3 posts. But agree w J Barro that politicians have to pander, as attacking the Fed and its independence as some suggest would be stupid and could destabilize markets. As much as I find the whole price gouging distasteful, I would rather hold my nose, wait for a commission and its findings in 3 years, and then move on. We see that all the time in Congressional Hearings. The fact that most amount to nothing may be a feature of the system, and I am ok with that as it limits government activism (let them act tough). Bottom line: the price gouging pandering is certainly preferably than blasting the Fed, or insulting the chair and the Fed Board. After all, I hope Harris and the Ds in charge don't become the party that blocked Peter Diamond to the BofGs and had the pizza guy and the cable tv growth guy as nominees for the same board. We clearly live in a 3rd-best world where hopefully the price gouging bs won't do too much damage. I hope Grumpy will now analyze the policy prescription of tariffs (those easy to win trade wars...), mass deportations, and less independence for the Fed, and their combined effect on inflation. Add tax cuts and no spending restraint to the mix. The price gouging is the policy chihuahua that may or may not bark. What a strange world we live in...
What has been will be again,
what has been done will be done again;
there is nothing new under the sun.
Ecclesiastes 1:9
I'm old enough to remember Nixon's wage and price controls and the idiotic campaign titled "Whip Inflation Now" We never learn from history.
The Democrats should just run on Directive 10-289 instead of sneaking up on it.
John, thank you for your concise analysis of Ms. Harris's speech and policy. Appreciated, as always. There is nothing new under the sun. Unfortunately, we must endure several more months of the political rhetoric, but along with your Goodfella compatriots, we will somehow make it through...
“Inflation is everywhere and always a monetary phenomenon.” [M. Friedman]
Fortunately, nothing Presidents and Congress can do affects inflation.
When will 'mainstream' economists (yes I know mostly dems) call out this faulty logic and explain that going after poorly defined 'price gouging' just camouflages the decline in the value of money?
@John H. Cochrane
You left out how the Biden-Harris administration re-appointed Federal Reserve Chairman Jerome Powell.