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“Inflation” and America’s Accelerating Class War

“Inflation” and America’s Accelerating Class War

Those who don’t see the fragmentation, the scarcities and the battlelines being drawn will be surprised by the acceleration of the unraveling.

I recently came across the idea that inflation is a two-factor optimization problem: inflation is necessary for the macro-economy (or so we’re told) and so the trick for policy makers (and their statisticians who measure the economy) is to maximize inflation in the economy but only to the point that it doesn’t snuff out businesses and starve workers to death.

From this perspective, households have to grin and bear the negative consequences of inflation for the good of the whole economy.

This narrative, so typical of economics, ignores the core reality of “inflation” in America: it’s a battleground for the class war that’s accelerating. Allow me to explain.

“Inflation” affects different classes very differently. I put “inflation” in italics because it’s not one phenomenon, it’s numerous phenomena crammed into one deceptively simple word.

When “inflation” boosts the value of homes, stocks, bonds, diamonds, quatloos etc. to the moon, those who own these assets are cheering. When “inflation” reduces the purchasing power of wages, those whose only income is earned from their labor suffer a decline in their lifestyles as their wages buy fewer goods and services.

They are suffering while the wealthy owners of soaring assets are cheering.

The Federal Reserve and federal authorities are not neutral observers in this war. The Fed only cares about two things: enriching the banking sector and further enriching the already-rich.

…click on the above link to read the rest of the article…

This Is How the Status Quo Unravels: As the Pie Shrinks, Everybody Demands Their Piece Should Get Bigger

This Is How the Status Quo Unravels: As the Pie Shrinks, Everybody Demands Their Piece Should Get Bigger

Fragmentation, discord, discontent, class war: this is the inevitable result of a shrinking pie.

The politics of the past 70 years was all about horsetrading who got what share of the growing pie: the “pie” being cheap energy, government revenues and consumption, sales and profits.

Horsetrading over a growing pie is basically fun. There’s always a little increase left for the losers, so there is a reason for everyone to cooperate in a broad political consensus.

Horsetrading over a shrinking pie is not fun. Everybody is shrilly demanding their piece of the pie should either grow or be left untouched; any cuts must come out of someone else’s slice.

Everyone turns on their most compelling emotion-based defense: “we wuz promised” is a reliable standard, as is “we need more money to defend the nation from the rising threat of XYZ.” “Help those in need” plays the heartstrings effectively–as long as the “help” comes out of somebody else’s pocket.

Everyone sharpens their knives, the better to carve a slice off somebody else’s slice of the pie. A passive-aggressive free-for-all ensues as everyone reacts with aggrieved defensiveness to any attempt to diminish their slice, even as they launch shrill attacks on everyone else’s defense.

As the pie shrinks, the motivation to join a broad consensus vanishes like mist in Death Valley. Any cooperation is merely a brief tactical move designed to carve a big chunk off another player’s slice. Once that’s accomplished, the alliance quickly splinters as the survivors battle over the meager spoils.

Any victory is temporary, as a new alliance will arise to decimate the previous winner. Winners in the zero-sum game of divvying up a shrinking pie merely set themselves up as the juicy target for the next ferocious attack by the resentful losers.

…click on the above link to read the rest of the article…

The Class War Has Already Started

The Class War Has Already Started

Here’s what’s obvious, but unacceptable: we need a new system.

Pundits and apologists are quick to chastise anyone who even speaks of class war, as if the words alone might spark what the pundits and apologists fear.

The pundits and apologists dread the words because they know the Class War has already started. The mainstream media’s hope is that denial will somehow suppress the broader recognition that the fault lines in American society are cracking wide open.

Last week’s entries explained why increasing wealth/income inequality is the only possible output of the current social- political -economic order. All the proposed “fixes”–more regulations, more taxes, more bureaucracies, etc.– will fail because they are merely extensions of a failed system that optimizes inequality, monopoly, cronyism, stagnation, low social mobility and systemic instability.

Here is my delineation of America’s nine socio-economic classes:

The Changing World of Work I: America’s Nine ClassesEight of the nine classes are hidebound by backward-looking conventions, neofeudal arrangements and a spectrum of perverse incentives and false choices.

A few commentators see the fault lines and understand the Class War is already rumbling. Correspondent Mark G. submitted these two articles as examples of the widening divides between various classes in the U.S.:

Are We Heading for an Economic Civil War?

How the widening urban-rural divide threatens America

In the first piece, Joel Kotkin describes the political capture of the Status Quo Imperial Democrats by the Left Coast media and tech culture of Silicon Valley and Hollywood, both of which have thrived in our hyper-financialized economy of 95% losers and 5% winners, and the Right Coast financiers, lobbyists, government bureaucrats and Wall Streeters who have benefited so handsomely from the hyper-financialization of the U.S. economy, politics, media and zeitgeist.

…click on the above link to read the rest of the article…

Greece and Global Class War

Greece and Global Class War

By 2008 the neoliberal project that had been propelled by bullshit, wishful thinking and copious quantities of bank money freed from any pretense that it could ever be repaid was coming unwound. The same ‘favor’ that American mortgage lenders had done communities of color and exurbs in the U.S. found peripheral Europe’s political ‘leaders’ and plutocrats ready, willing and able to borrow money that stood little chance of being repaid by them. As soon as it became publicly evident that trillions in bank loans were unlikely to be repaid bankers, and the government officials who work for them, looked around to see what groups were (1) able to pay interest, and eventually principal, on debt that they had seen no direct benefit from, and (2) lacked the political power to resist being forced to repay it.

Lest this seem too diabolical to be plausible, this is the basic lending model that has been used by Western banks and backed by Western governments and the ‘independent’ institutions they control for some six decades now. The U.S., Germany or France have long lent money for infrastructure projects, agricultural ‘upgrades’ like the Green Revolution and direct purchases of technology and / or munitions. This indebted the citizens-by-degree of both internally and externally organized nation-states while making large profits for the corporations who could sell their wares thanks to the ‘largesse’ of Western states and banks. This practice in some measure explains how corrupt and / or incompetent government officials and plutocrats in Greece managed to line their own pockets while permanently indebting the good citizens of that storied nation.

 

From a creditor’s perspective pools of wealth like pensions, bank deposits and health care funds tend to be fungible and therefore ripe for the picking. That ordinary citizens in many cases labored their entire lives and forewent direct compensation in exchange for these benefits has had little to no bearing on their being taken to settle debts incurred by others. 

…click on the above link to read the rest of the article…

 

 

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