2min chapter

Debunking Economics - the podcast cover image

What will all this inflation do to us?

Debunking Economics - the podcast

CHAPTER

The Importance of Price Gouging

She was talking to the governor of the Federal Reserve. She was giving him a hard time, he didn't get a straight answer. By your own figures, you are going to make 2 million people unemployed by pushing up interest rates. You're basically adding to that wealth divide by trying to contain inflation by interest rates. The workers already being screwed, the wage rises well below the rate of inflation. So it's, again, it comes back to the economic models in which the only real source of rising prices is rising wages. And therefore, they think if they can reduce inflationary expectations, then workers will demand lower wage rises and you'll get rid of inflation that way. But they didn

00:00
Speaker 2
Well, she was... Well, you would have enjoyed it. She was talking to the governor of the Federal Reserve. Oh, okay. She can't give people a hard time. This is true. She was giving him a hard time. And she was asking about, you know, how fixing inflation with interest rates, how can she ask the question? She didn't get a straight answer. How can a central bank, by pushing up interest rates, fix price gouging, supply chain kinks, and a war in Ukraine, how are you going to fix all of that? She then went on to say, by your own figures, you are going to make 2 million
Speaker 1
people unemployed by pushing up interest rates. I was thinking, yeah, well and by the way, with my comment, I'm much more prepared to watch... Yeah, I'm much more prepared to watch her. I mean, yeah, so making all these people unemployed, so you're basically adding to that wealth divide by trying to contain inflation by interest rates. And the workers already being screwed, the wage rises well below the rate of inflation. So it's, again, it comes back to the economic models in which the only real source of rising prices is rising wages. Yeah. And therefore, they think if they can reduce inflationary expectations, then workers will demand lower wage rises and you'll get rid of inflation that way. But they didn't cause it in the first
Speaker 2
place. So the only way of stopping it, I mean, we have to accept that it's there, but the only way of stopping it, it being taken advantage of and getting that rich poor divide just getting worse, is to stop price gouging. That's
Speaker 1
the... Yeah, and it also means a lot of stuff is going to have to be rationed and state distributed. You can't afford socially a situation in which 25% of the population can't afford to live. Now because of the incredibly skewed income distribution we have now, that's probably the level. I mean, the UK, the Office of National Statistics put out a piece about a month ago saying that I think 25% of the UK population found they had to make a choice between heating the house or feeding the kids. Yeah, it's crazy, isn't it? It is crazy. That is a declining economic system, not a rising one. And if you're a declining one, if you let the poor stick with the skewed distribution they've got right now, they're going to die and they don't take kindly to
Speaker 2
that.

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