It Could Happen Here - Inflation and the Class War

Episode Date: June 23, 2022

In this episode Mia walks us through the Federal Reserve discovering Neo-Marxism in a desperate attempt to figure out why inflation happens and why it matters.See omnystudio.com/listener for privacy information.

You should probably keep your lights on for Nocturnal Tales from the Shadowbride. Join me, Danny Trejo, and step into the flames of fright. An anthology podcast of modern-day horror stories inspired by the most terrifying legends and lore of Latin America. Listen to Nocturnal on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Should we record this episode? Sure, let's start. All right. I'm ready.

I'm sure we could use some of that as the opening. Hi, welcome to It Could Happen Here. The podcast that is about medical ethics In the 1860s Not today, but fair Yeah, no, today Today it's me, Christopher Wong And we're doing an episode about inflation Sick

Speaking of medical ethics Well, speaking of kinks, actually The moment I said that, I was like, I have opened myself up for a real broadside here. That was some of the first weird internet porn I came apart. It was specifically the cast of DuckTales being like inflated. Okay, let's get to the topic of the episode. This episode is now about DuckTales inflation fetish pornography that is enough uh pre-rabble uh christopher what do you have for us today yeah so we're talking about inflation um

we're talking about economic inflation yeah yeah that one to be fair this is i mean somebody was making money off of that inflation i'll tell tell you that much. Oh, God. I mean, one thing, DuckTales actually does crossover because of Scrooge McDuck and his giant vault of money. So it actually does tie in. That's right. I can tell you right now,

that's not the only thing about him that was inflated. Oh, boy. Talking about his dick. Okay. Let's keep it on track okay so all right all right if people are inflation it's not good it's pretty high it's i probably should have looked up the inflation rate isn't it like eight before i did this yeah i think it's although it keeps going point six yeah yeah but every time someone says it's although it it keeps going 8.6 yeah yeah but every time someone says it's this or it's that people are like well no but they also changed these these and these indicators yeah five years ago and these other ones 10 years ago so really it

would be this and i have no way of there's judging who's so accurate about that this this is the thing i i didn't put this in the episode but there's a thing that if you study economics you will realize pretty quickly is that all of the like basically all of the econ statistics that we have are fucking bullshit and they're like are basically like they're they're really really fake like yeah like we like we don't like one of the big ones that you know is like one of the underlying things that makes all economics fake is that no one knows how to like actually calculate the value of of just like a factory like like if you have like a bundle of goods right and they're not the

same thing so i don't know you have two factories they make different things actually figuring out what the value of that is is like fucking impossible and they're like the the the the way that it's done in like if you look at like, like there are these, like the UN produces statistical annals, right? And the, the, the values that are in the, like the UN statistical annals are literally them guessing because,

because the thing is like the value, depending on like the, the actual value of the thing changes, right? Depending on where it is on, on like a supply and demand curve, blah, blah,

blah, blah, blah. And so they literally just tell the, the, the people who are doing the econometrics, you just like pick a rent, pick a random like price that they that they think is equilibrium.

So it's completely bullshit. It's bullshit, like literally all the way down. It's nonsense. All of the indexes are wrong. Yeah. Unfortunately, I. The field of economics doesn't really care about this that much, so we're going to have to sort of take them seriously. And the thing I specifically want to talk about today was there was a really interesting paper that was produced by two economists at the D.C. Federal Reserve, David Ratner and Jay Sim, about why inflation happens, which is called Who Killed the Phillips Curve? A Murder Mystery.

Who Killed the Phillips Curve? A Murder Mystery. And we're talking about this for two reasons. One, because it's funny, because what is going to happen over the course of this paper is that the Federal Reserve has, Comrade Federal Reserve has discovered Marxism. And they are going to attempt to solve this mystery of inflation by applying by by applying marks and the second thing the second reason i want to talk about this is that it reveals something that's very very important about the current political situation which is that both economists and like the rest of the ruling class in general do not understand what inflation is or what well they sort of understand kind of understand what it is they don't know what causes it um and before we go on here i should like explain what inflation is

because most people i don't know i the the way i got talked about i talked about about this with garrison like a few days ago about like like the way people get taught about inflation is that inflation is when like your money is worth less yeah when when the government prints more money so each individual dollar is worth less because there's more of them circulating yeah yeah and and this is like this is this is propaganda um that is not what inflation is inflation is literally just when prices go up and if you think about it like okay that's kind of the same thing, sort of, because if prices go up, your dollars are worth less money, right? But mostly inflation isn't about the amount of money becoming less.

Mostly it's about something happens that makes things cost more. And luckily, yeah, it is possible for you to get inflation because the government printed too much money. Well, and these things are symbiotic, right? Government will print more money because prices are going up so that people need more money in circulation to buy things. You saw this happen a lot with the COVID pandemic. So it's it's both these things kind of feed off each other and contribute to this overall problem. Sort of. yeah sort of but but i i think something that's important to understand about this is that if you look into the actual econ stuff like the supply of money like how much money there is in the world

has very very little to do with inflation it only really has effects inflation when you're dealing with like i don't know like 1930s like 1920s germany or like china after world war ii where just there's literally just like you know the government prints so much money that like like my my i have my family has a bunch of stories about like literally carrying around baskets full of money in China to like buy a train ticket because. Yeah. But like that's stuff. This is like the shit everybody knows about Weimar Germany too is like the wheelbarrows full of cash and stuff. Yeah.

But this stuff, that's actually, it's really rare. And it's like the reason everyone knows about when it happens is that it's only happened, it's happened like four or five times. And mostly that's not that's not what why inflation happens and if you look at inflation right now for example there's the prices of like a whole bunch of stuff from like food to like microprocessors are going up because a it's harder to produce things because of covid b our supply chains are collapsing and c because russia invaded ukraine and like absolutely annihilated an enormous portion of the global food supply and this that stuff

causes prices to go up right because now it's harder to make a thing and because it's harder to make the thing that thing costs more and this has you know this has literally nothing to do with with the money supply right like it doesn't have any how much money there's in circulation um and there's another reason that that that we'll get into kind of at the end that inflation happens that is also has nothing to do with money which is that corporations uh just do price markups because they know people will pay for it and that's that's happening too um but having an explanation of like why inflation is happening is really really politically important even even if the explanation that you have is completely wrong it it allows you to do really powerful things politically um like one of

the ways that neoliberalism sort of took power is that in in in the 70s and 80s especially in sort of sort of the the the the 70s in particular both both in academia and as sort of politics writ large, there's this problem where you have a bunch of these old Keynesian economists who are like, Keynesians are like, they're big on like using government spending to keep the economy running and like you get a lot of welfare programs, but yeah, it was like, okay, you can avoid crises

by having the government do spending. But the problem is that like, they couldn't explain why inflation was happening in the 70s um and this was because the canyons were the keynesians are working off something called the phillips curve and we have to do a little bit of econ bullshit but it's not that complicated i promise uh i survived it so it'll be fine so the phillips curve says that like the closer you get to full employment and like the lower the unemployment rate gets the higher inflation gets and this this sort of really starts to kick in around from like five percent unemployment to like four percent to three percent unemployment uh the the inflation

rate like spikes and you know the the reason this is supposed to happen is because the lower the lower uh the unemployment rate is uh wages start to rise because as there's less people who's unemployed, you have to pay them more money to get them to work. And yeah, so this is, and the theory behind this, right, is that like wages increasing is what causes inflation to happen because it makes everything cost more. Now, there's a simple and obvious, this is like, this is a very simple and obvious solution to the problem of why inflation happens. And like all simple and obvious solutions, it is also wrong. The Phillips curve does not explain inflation.

I'm going to refer everyone in the chat to this tweet that I made. I want you to look at Exhibit A, which is the Phillips curve. I want you to look at Exhibit A, which is the Phillips curve. And then I want you to look at Exhibit B, which is I actually plotted unemployment versus inflation in the U.S. from 1946 until 2021. And I want to get a description of what the second graph the next graph, we have what's not a curve uh what is instead inflation and unemployment graphed um except it's zigzagging everywhere like dark sides omega beams um it is not in fact doing a curve my my favorite thing about this is that um like multiple multiple like and this happens with both unemployment and inflation uh there are multiple unemployment rates that are

associated with different inflation rates and multiple inflation rates that are that that generate two different rates of unemployment it's it's incredible it is it is it is it is a it is an is an absolute sort of monument to uh how much this stuff doesn't work there is a there is a really good reply to your graph tweet that says economists are the modern day court astrologers it's basically true like which is a funny way to look at i. I mean, court astrologers, though, were probably right more often. That's true. If you're simply guessing, is it a good idea to invade this country or not?

50-50 odds it works out for you, right? If you're trying to predict, like, I don't know, the S&P 500, there's a lot more variables. Yeah, and this is one of the things that, like, okay, if you can be the person who, like, walks into a lecture and goes, the emperor has no clothes, you can, like, attain immediate ultimate power,

because, again, this stuff is, like, it's so trivially and easily, like, falsifiable that, like, you know, like milton friedman is able to do this and you know okay so i should say about the false group the phillips curve that like i showed you that's like a curve is like a very simple one there's all of these really convoluted like modifications to it um there's you know if you look like the new the new keynesian phillips curve or whatever they've done they've done a bunch of math to it to try to like make it kind of work. Um, the problem is that it doesn't work.

Uh, there's, there's a, there's another Phillips curve that's been, that was like modified by the new, by the neoclassical economists. And the neoclassical economists were like, this thing doesn't work. Okay, here's some modifications you have to put in. But that curve also doesn't work. Uh, and you know, and this is a real problem right because okay so if if if this inflation explanation of why inflation happens doesn't work like what is actually happening um milton friedman who sort of like takes the the economic scene by storm by like predicting a lot of the inflation in the 70s and like sort of having an answer to it is his his argument is that uh inflation is they they print too much money and there's inflation and this is kind of a gross oversimplification of of what his actual point is but it's it's it's

more true than any of like friedman's oversimplifications so i'm just i'm just gonna leave it at that and this is what the Federal Reserve and like Paul Volcker used to try to fight inflation in 1979 he what Volcker does is he just tries to massively reduce the money supply the problem is that this didn't work

like inflation is still like above 10% I think it spikes to like 15% or something like into like 1984. So. And just based on how much larger Huey, Dewey, and Louie got, sometimes two or 300%. Do you know who else wants? Oh, boy.

That's right, Garrison. All of our sponsors are into DuckTales inflation fetish pornography. This is It Could Happen Here, a podcast sponsored by the concept of masturbating to the cast of DuckTales getting inflated by bicycle pumps. Welcome. I'm Danny Trejo. Won't you join me at the fire and dare enter? Nocturnum, Tales from the Shadows, presented by iHeart and Sonora. An anthology of modern day horror stories inspired by the legends of Latin America.

From ghastly encounters with shapeshifters to bone-chilling brushes with supernatural creatures. I know you. Take a trip and experience the horrors that have haunted Latin America since the beginning of time. Listen to Nocturnal Tales from the Shadows as part of my Cultura podcast network, available on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Oh, we're back. Well, I've done my part. Yeah, so, okay, so we're left off, right?

There's a bunch of inflation happening. Some of it is happening to DuckTales characters. Most of it is happening to the economy. Paul Volcker has tried to stop the inflation by, like there be less money and this has done nothing other than like dramatically increase the unemployment rate now the problem with again friedman sort of explanation of of inflation is that inflation persistence of the 80s and it only stops after insert foreshadowing noise here uh reagan crushes the unions and uh we will come back to that is to solve inflation we should stop all unions that is your official position no wow okay but this this is this is part of the position of the federal of the marxist federal

reserve so we will we will get there in a second so all right all right so so the thing i've been describing that that freeman is pushing about the money supply, this is called monetarism. And monetarism is like the fakest theory of inflation. Like it's a theory of inflation so fake that like even other like even other like neoclassical economists don't accept it. Like none of the other different neoliberal schools of economics, like every single one of them look at this and was like, this is nonsense. Like, what are you doing? But, you know, so, okay. So, it's like the TikTok astrology compared to the neoliberal court astrology.

Yeah, it's all, it's like, it's somehow an even faker explanation of this. But, you know, the problem is this brings us back to, like, where we started, which is that, like, okay. So, if the monetarist stuff doesn't work, and phillips curve also doesn't work uh what is causing inflation and the answer from inside of the like the actual field of economics is that nobody knows um here's uh daniel k tralo who was the former federal resent he was a former federal uh reserve bank governor and was a member of the federal reserve board uh so he's a he's a very very high ranking like guy inside the sphere of people who try to apply econ shit and uh here's here's a quote that he gave about it in 2017 quote the substantive point is that we do not

at present have a theory of inflation dynamics that works sufficiently well to be of use for the business of real-time monetary policy making so what what are you saying there is like if you translate that out of econ speak and you don't even really have to translate that out of econ speak much what he's saying is that he no one has any idea why inflation works and none of the models work well enough to let you like try to deal with inflation if you're you know the people who control the money supply like the fed now economists like we've seen in the past if you've been following this stuff in the past like 10 years ish especially in the last five economists have been getting like increasingly desperate to explain what the fuck is happening

and they're getting increasingly increasingly desperate right now because you know hey inflation's back and that that brings us to the paper i mentioned at the top of the episode which who killed the phillips curve a murder mystery which opens talking about two sort of massive recent failures of the like new keynesian we fixed we we added variables to the phillips curve until it like sort of kind of works ish maybe but you know one thing they're talking about two of its sort of like incredibly massive failures uh the first is in 2008 where there's you know there's a recession oh really what happened economically 2008 2008 there's a recession but what's interesting about this right is that okay so if you think about this like

there's an inflation is there's a recession unemployment skyrockets this should cause deflation well you know because you know what else happened in 2008 the official ducktales video game came out. So I think this could... We are through the looking glass, people. You know, I mean, this is not any more bullshit than any of the other stuff they're doing. So like... But you know, okay, there's this thing that happens where like, okay, the inflation rate should have been decreasing and it just stays the same and economists are like what and this is this is called the missing deflationary period there's there's a second thing where during the sort of like quote-unquote economic recovery in

the last like 10 years ish i until basically until before the pandemic employment rates dropped really really low and this should have started this should have triggered inflation but it doesn't and you know okay and so the the the people who run the philips group like the economists are looking at this and they're like okay what do we do and the fed economist solution is again and i shit you not marxism and more specifically the solution is neo-marxism um neo-marxism yeah yeah this is this is this is something else i'm sort of excited about which is that i finally get to tell the world what a neo-marxist is because this is technically a thing it's just that none of the people who talk about neo-marxist have any idea what it is post-modern neo-marxism yes actually weirdly well i mean i guess you could

have okay once we explain it i will i will talk about how you could theoretically have a postmodern neo-Marxist, but I don't think I've ever met one. Whoa! Welcome contradictory terms. Okay, okay. I'm excited to hear this. Yeah, yeah, all right. So what is happening here is that there's an old joke in Marxist circles that the most advanced bourgeois economist is 50 years behind the most vulgar marxist and uh this is this coming true uh the federal reserve economists are developing they're trying to make a new phillips curve and the new phillips curve is what they call a khalekian phillips curve um because it's based for guys new curve just dropped yeah it literally is

except this is this is this is this is the neo-marxist curve and it's based on the works it's kind of loosely based on him but it's just based on the work of a Polish Marxist economist named Mikhail Kalecki. And Kalecki is a he's a very, very weird Marxist, like by Marxist standards is extremely weird. And to explain why this is, we have to we have to speed we're gonna have to speed run Marxism 101. So I'm going to attempt to explain Marxism in one page. so i'm going to attempt to explain marxism in one page all right let's okay okay marxism 101 right you have a worker she has to go find a job and sell her labor to like get food to eat because otherwise she can't support herself um so she goes to work at a factory that makes like hospital stretchers now under capitalism and this is this is this is this is the thing i'm explaining this is this is like the this is the orthodox marxist interpretation so uh the people who are about to scream at me for a million years about how this is wrong i'm explaining the orthodox position damn it uh you're not explaining marxism yeah no okay yeah chris quick question what what what what what

was marx so marx was a experiment a psychological experiment run by Harvard University that was concluded in 1897. But he wrote a bunch of books, and one of those books is Capital. And in Capital, so okay, so you have your worker, right? And she works to make hospital stretchers. And the thing that makes the hospital stretcher have value is the amount of time that it takes a worker to make it. So under this sort of understanding of what Marxism is, value is just labor time, right? The value of an object is how many hours of work it takes to make a thing. right the value of an object is how many hours of work it takes to make a thing now this labor time or you know like again like how long it takes to make the thing

uh the value of it it isn't measured by like how long it takes to make like an individual cot right it's measured by like how long on average it takes society to make so you know for example like you say this is in finland right it's based on how long on average it takes to make a hospital stretcher in finland not like you know how long it takes to make in like bolivia or something um and this is the technical term for that for like this thing is socially necessary labor time um so our worker like works for through her day and after six hours she's produced enough value to support herself she can buy food she can pay her rent she can like i don't know maybe buy a car or something but she still has to work two more hours of the day and during that time the labor that she's doing just goes to the boss and this is called this is called surplus value like the amount of time that you're working where you're

working for the boss and not to like support yourself uh this. This is called surplus value. It is the objective root of exploitation. In Marxism. Yeah. It's value that goes directly to your boss. That. And the reason. That like your boss can just steal this from you. Because they have the factor and you don't.

So if you want to produce something for them to survive. You have to go to him. And this is called the ownership of the means of production. Now the price in theory. of this hospital stretcher right is based on value on his value or how many hours it takes to produce it um and how precisely you get from dollars as a unit of measurement from two dollars from time is a subject of an absolutely interminable debate called the transformation problem uh if you want to go read more about it i have wasted probably four years of my life reading about it i don't recommend it but the answer is you can sort of kind of get it

to work if you fuck with the numbers a lot uh but it's if you do it's unclear if they mean anything you can also bypass it entirely by arguing that only works in the level of the entire world economy blah blah blah i don't care uh if you do care about this uh don't yell at me go read chapter six of uh bickler and neeson's capital is power palmatics theory is critique fred mosley's uh money in totality and killman and mcglure's a temporal single system interpretation of marx's theory of value of marx's theory. And then Google DuckTales Go Big. Jenny Weinle. And then send all of that,

all of your notes on both the texts and the DuckTales, send all that to IWriteOK on Twitter and they will get back to you. Please. You will probably come out of, you will come out of the DuckTales stuff more sane than you will doing the Marxism stuff.

So, yeah, but I've now covered my bases. This is Orthodox Marxism, which is the stuff we've been talking about, is based on another, there's another assumption here that's important, kind of, technically, which is that, like, so Orthodox Marxists assume that, like, so you have a bunch of sectors of the economy, right? There are people who, like, make different stuff. Yeah, there's people who do, who make make hospital gurneys people who do more important work like make podcasts yeah yeah and everything in between and the assumption is that okay so you have a person who makes like podcasts right and the other people who make hospital structures figured out that making podcasts is more profitable than making hospital stretchers so they start moving all their capital into making podcasts but then because there's too many podcasts, the rate of profit goes down and eventually the rate of profit across all sectors is supposed to equalize.

Yes. Price is supposed to tend towards value or like how much something costs in money is supposed to tend towards the labor time socially necessary to produce the commodity in a given place. This is like the basic thesis of like what you call orthodox Marxist, like orthodox Marxist political economy or Marxian political economy, whatever the fuck you want to call it. Now, in starting in about the 1920s, there was a new Marxism. This is called Neo-Marxism. Neo-Marxism's basic thesis – I think I heard about that from Dr. Jordan B. Peterson. Yeah, yeah, yeah. Now we're going to get the inside scoop on Neo-Marxism.

So Neo-Marxism, their basic thesis is like what if profit rates don't equalize across like between different parts of the economy that make things and you know and because they don't do that what what if what if you don't get competition because instead of people being able to just freely move capital between like sectors what if you have monopolies and if you have monopolies in instead of sort of price being like a price is just value blah blah blah because everyone can keep moving their money around price is now a price price is now derived from the power of a corporation because if you know if if you are a powerful enough corporation to like have a monopoly and stop anyone else from producing the thing that you do now you can now you can charge what are called markups and this is where mikhail kaleki like enters from stage left um kaleki like he probably should have

been the father father of like modern macroeconomics in the sense that like he invents a bunch of the shit that like canes does before canes did but the problem is that uh he's writing a lot of this in polish and so the the sort of like anglophone like economists are not reading it because he's in Poland and he's a Marxist and he's writing in Polish circles. But he invents a bunch of the stuff that like Keynes invents slightly earlier. And he starts like looking at like monopoly and oligarchy what the like value determined price is supposed to be because they can prevent anyone else from selling the thing. And then, you know, once you have a monopoly in the market, you can force people to just like fucking suck it up and pay it because they can't get it from anywhere else. And this is actually this is like pretty similar in some ways to like a bourgeois economic economic theory of how this stuff works, which is like, okay, yeah, in bourgeois economics, monopolies can increase the price over where they're supposed to be in a perfectly competitive market because they have power, blah, blah, blah, blah, blah. But there's something very different in Kalecki's work that is not in the normal bourgeois stuff, which is that what he argues is that trade unions – okay, so you have a trade union, right?

They represent the workers who work at a company. And these trade unions are fighting over the product of the markup. And this keeps the size of markups or these sort of like these price increases that monopolies are doing down because the larger the markup that these companies apply the more incentive there are there is for unions to sort of like fight for pay increases right because okay well the the the the more expensive the goods are the more money they're like very clearly is on hand and so the larger the demands uh you get from organized labor and this is the insight that who killed the phillips curve the paper i was talking about jumps on that unions fight over markups and thus that the strength of unions is part of what helps determine inflation and they point out that you know unions want lower prices and for for goods and the reason they want lower prices for

goods is that the higher the price is of something right the less people buy of it and the the the less people like buy of the thing the less has to be produced and that means that there's less people being employed and so if you're a union you want like the most number of people being employed as you can and so that means that means that you want you want prices to be low because yeah that because because lower prices means more of the more of the good being produced more of the good being produced means more jobs. And this is where we get to sort of the fundamental assumption behind the regular Phillips curve. And this is also true for this sort of like new like pseudo-neo-Marxist one, right?

Their assumption is that inflation is driven by rising wages. and you know even though the unions are trying to sort of like reduce the markup and like and reduce markups reduce prices to increase the number of workers firms are trying to increase prices so they can make back the money they're paying out in wages now when unemployment is like high this doesn't matter because wages still don't rise very fast because there's you know there's this enormous pool of people who are incredibly desperate for jobs you can pay them sort of like nothing and they'll come work for you because the alternative is starving or getting evicted. But when unemployment is low, the bargaining power of workers increases, and that's where the class war starts. Yeah. I mean, you see this in 1941 with the screen cartoonists' strike that Scrooge mcduck brutally cracked down on um and eventually

had to cede seed ground to the guild but scrooge scrooge mcduck was was brutal during during this time period post the 30s rise of unions that's right garrison and that's a big part of why huey dewey and louis had to track him down in his money room and stick a bicycle pump into his mouth while he was sleeping and begin to inflate him largely while touching themselves. Critical support to Huey, Tooey, and Louie? Oh, boy. So, as with... I don't even know how to transition that.

I got none. I can't even know how to transition that. I got none. I can't do it. Nobody does. I mean really the main thing is that the concentration of wealth in the hands of a small number of individuals will inevitably lead to inflation. Which is true, and this is one of the things that the economists are sort of talking about here, which is that like – that that that the economists are sort of talking about here which is that like okay so once once you get an actual sort of once you get like a real classwork going on right where you're getting a classwork to the extent that like the bargaining power of workers and the bargaining power of of like capitalist firms are essentially are like very close to being equal

um you get inflation now what's interesting about this is that when you have strong unions, like when you have strong unions, you get high rates of inflation during periods of sort of inflation shocks, right? Because the unions are sort of like propping up wages and this theory. But, and this is the interesting part, right?

You get way lower rates of unemployment. And so, okay, let's just step back for a second. So what's happening here is, right, if you have strong unions and there's something else in the supply chain that increases costs say to to to pick a completely random example that never happened uh say for example you're in the 1970s and the price of oil has quadrupled in one year and that increases the price of everything yes now when you have strong unions but relatable uh this this never happened uh don't google the oil shocks happened i don't google the oil shocks

actually literally don't google the oil shocks because almost everything written online about the oil shocks is a lie i yeah i think i've talked about that before on the neoliberalism episode but yeah it's all a lie but but basically like one of the what you know okay what what happens here is if you if you have strong unions you get bunch of inflation, but people don't get fired. And when corporations are strong and you don't have unions, you get these shocks, and the inflation rate is much lower, but everyone gets fired. Your unemployment rate goes up to like 10%. It's an absolute disaster. That's one thing to note about the way the sort of Marxian Phillips curve analyzed the situation. But there's another consequence here, which comes back to what inflation is under a Phillips curve. Inflation in a Phillips curve is literally just wage increases. So when union power is weak, inflation stops.

But what does this actually mean? What it means is that wages aren't growing. Sure aren't. Yeah. And this brings us back to like the sort of weirdness we saw in the earlier part of the episode right after 2008, right? Where there should have been deflation because the unemployment rate was really high. And also like during the recovery period where unemployment rates are super low, and there should have been inflation, but there wasn't. And the answer is why wasn't there inflation?

It's, well, okay, because no one had a union, and so everyone's wages just stayed the same the whole time? I have another explanation for this. When I previously said the DuckTales game came out in 2008, I was actually incorrect. Oh? 2008 was when Nintendo Power listed the DuckTales game as the 13th best

Nintendo Entertainment System game. It was voted that in 2008. Now, it's important that 13 is a very unlucky number. So by voting the DuckTales game the 13th best game from the NES in 2008, they could have basically caused a psychic rift in the fabric of the universe, creating the financial crash. That's fascinating, Garrisonison because i was 13 in 2001 when i came across that angel fire website with home-drawn uh ducktales inflation pornography wait so this caused 9-11 i think in a lot of ways yeah yeah that makes sense

you know who else may have been a contributing factor to 9-11? The products and services that support this podcast? I think so. That's right. That's right. We do not accept a sponsor unless it gets the explicit sign-off of the king of Saudi Arabia, who, if you'll remember, did 9-11. Welcome. I'm Danny Thrill. Won't you join me at the fire and dare enter? Nocturnum, Tales from the Shadows, presented by iHeart and Sonora.

An anthology of modern-day horror stories inspired by the legends of Latin America. From ghastly encounters with shapeshifters to bone-chilling brushes with supernatural creatures. I know you. Take a trip and experience the horrors that have haunted Latin America since the beginning of time. Listen to Nocturnal Tales from the Shadows as part of my Cultura podcast network, available on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. podcast or wherever you get your podcast all right yeah i i'm not gonna i'm i i am not getting paid enough to properly transition this so i'm not going to uh so it turns out that yeah so the

reason there wasn't been inflation is that uh there's no unions and because we don't have unions our wages all suck and uh this means that you know wages wages are stagnant and low and it means that they're not a drive the unions aren't a driver of inflation and also low wages aren't driver inflation because they you know like unions aren't around to increase wages now meanwhile the other thing that this suggests is that monetary policy and they okay i think they're uh they're an exact analysis was like i think like 84 percent of like inflation shocks can be explained by looking at like union density um and but this also means to me what like monetary policy like how much money there is like in the economy has like basically no role in

inflation whatsoever uh and and this is you know okay so like this has all been sort of one perspective from some economists of the federal reserve and we can ask the question, why does this matter? Why does sort of one group of people at the Fed, their response to this matters? And partly it matters because it's, again, extremely funny to watch the Federal Reserve turning to neo-Marxists to try to explain why inflation happens. But it also matters because theories of inflation dictate inflation policy um jerome powell who's the the chairman of the federal reserve was had a press conference on may 4th and it's too long to play the whole thing but he he has the speech and he lays out a few things that are interesting so he talks about a bunch of stuff that's causing inflation rising production

bottlenecks increasing crude oil prices increasing commodity prices from like russia's invasion of ukraine all these lockdowns in, they're keeping factories like closed. And like, yeah, okay, those are all like reasonable things that cause inflation. But then when you get to like what the Fed is actually going to do, he starts talking about how the job market is too good for workers right now and unemployment is too low and that's what's driving wages up. So his plan is he's going to tinker around with monetary policy to reduce wages and decrease the demand for jobs and this brings us back to like two things the first part is just the class war part of inflation right prices are rising right now because someone inside like prices are rising right now and someone inside if you want them to not to like cease to

continue rising somewhat some part of like the company is going to have to take a hit to like their, their, their percentage of like the, the sort of the markup, right? Like their, their percentage of like the,

the price increases that corporations do above like cost. And. Okay. So someone has to do this and the federal reserve like absolutely wants to make sure that the person paying for that is you, the worker. And the second part is something you might've that the person paying for that is you, the worker. And the second part is something you might have picked up on if you're paying close attention. And this has been something that's been true of both the Fed chairman and the Fed economists do this too, which is they do this – when they talk about inflation, they do this kind of two-step, right?

talk about a shock or something that causes prices to increase like you know a bunch of ukrainian wheat like suddenly being unharvestable because the russian army is squatting on it or like chinese factories shutting down reduces the amount of wheat or price of electronics or sorry reduces the amount of wheat or the amount of electronics being produced that drives up prices right they talk about like there's an inflationary shock and then they start talking and instead of talking about that anymore they start talking about unemployment levels in the job market and monetary policy being what drives inflation. And I think this is a very important piece of ideology because if you look at what's going on here, right? If you go back to the 70s, it's not – like inflation in the 70s is not the union's fault.

Like the inflation in the 70s was – like in large part, the original price increases were because the price of oil quadrupled in one year. in in large part the original price increases were because the price of oil quadrupled in one year but you know but the fed instead focuses on wage increases is what drives inflation even if they're sort of like using like marxist to do it and what they're doing here is shifting the focus from the actual shock that is like the thing the immediate thing that is increasing prices and they're shifting the focus from the shock to the people who are reacting to it and from there the question stops being about like dealing with the shock itself and starts being about who's going to pay for these price increases and in the 1980s like reagan's reagan's solution to this is well okay he's just going to make organized labor pay for it and so he just annihilates he annihilates the unions he uses the state to do it just crushes the unions completely

and price increases you know prices stop completely, and prices stop increasing, right? And they stop increasing because the production costs of all of these goods decrease because workers are no longer getting paid and they lose all their benefits. But this is the thing. They never dealt with the actual source of the problem, right? Oil prices are still really high to this day, and we never transitioned off of oil. still really high to this day and we never transitioned off of oil and to look at sort of that problem i want to briefly look at another theory of inflation which is one presented by steve mann who i think we've actually had on the show before he's one of the people at strange matters and he wrote he wrote this article called notes towards a theory of inflation

which is based on the work of a heterodox economist named frederick lee who is he's a cool guy and all of this stuff is like completely out there from econ from the econ perspective but it it makes more sense than most regular econ stuff so the sort of like founding observation of like that like frederick lee's basing his stuff on is that like okay prices are not set by like an abstract market right the price of something in a grocery store is set by a guy. Like there was a specific guy or there were like several specific guys whose job it is to set the prices for the firm. This theory of like – well, it's not even a theory.

Like the fact that this is how prices are formed by just a guy who sits there with a notebook or like a computer is this is what the price is going to be. This is called administered prices. And Lee like very convincingly argues that like this is how firm be this is called administered prices and lee like very convincingly argues that like this is how firm this is how both large and small firms actually set their prices right a guy calculates his expenses he adds a markup and he sets the price now steve mann argues that these prices don't generally tend to increase naturally because the price setters don't generally want to just increase the price randomly because if you if you increase the price randomly you will piss off your customers and the customers you know okay

they'll tolerate like some small increases but if you raise the price enough they lose your goodwill towards your brand and they'll like they'll go off and try to find another brand and this is disastrous because even if you reduce the prices back down again like the goodwill is lost and that sort of like you know the sort of like happy association that like you have in your brain between like, I don't know, like Nestle chocolate or something or like whatever brand of thing you're buying, like you get pissed off at them because the price is now like way higher. So, you know, you don't go back to the same like grocery store because they've increased their prices. Now, obviously, this is like there's like this is subject to constraints, right? Like if if you need insulin and the monopoly that controls insulin production just jacks the price, you're screwed, right? There's no sort of, like, there's no other place you can get insulin unless you're going to try to make it.

So your solutions are you either try to ration it and you die, or you pay for the price increases. And this is bad, and it does happen, but most goods aren't like this. And so price increases, when they happen, tend to be small and fairly infrequent. Unless the person – and the reason this wouldn't happen is if the person setting the price has no choice. And the main reason that if you're a person setting a price that you would have no choice but to increase the price that you're setting, the main reason you would do this this because something happened to your supply chain um i don't i don't know if you all see there was a tiktok going around from a farmer in iowa who was talking about like why why food prices are going to keep increasing the woman honestly i bless her heart honestly thinks that food prices are not going to go up she thinks that this is the highest they're going to go i tried to explain to

her that that was not the case that they're absolutely going to go up. She thinks that this is the highest they're going to go. I tried to explain to her that that was not the case, that they're absolutely going to go up even more. And I told her there are things that like we have to buy. There's something we had to buy that two years ago cost us $24. Last year was about 46. This year it is costing us $96. Okay. Local farmer, 50 head of cattle. It's costing him $8,000 a month to feed them. Please understand, food prices are going to go up. Yeah, and so you can see here what's happening is that at some point down the supply chain, prices are increasing either because of climate change or because of the war in Ukraine, because of COVID, because of any thousand sort of other factors. And eventually, the farmers who are setting the prices, they have to increase their prices

because they don't have a choice right because because the each each person further back in the supply line as a charity right like they have to be able to pay a bunch of shit bills yeah and and this this sort of you know this is the uh steve calls it like that he calls it the the supply chain theory of inflation right and you know in this model like this is what's causing inflation right each person successively down the line has to has to increase their markup the supply chain theory of inflation, right? And, you know, in this model, like this is what's causing inflation, right? Each person successively down the line has to increase their markup because they have to cover the newly increased production costs.

And this is important because unlike most models of inflation, inflation isn't being caused by like some kind of like giant macroeconomic thing. Like it's not being caused by like unemployment or like monetary policy, but it's being caused by very, very specific microeconomic thing like it's not being caused by like unemployment or like monetary policy but it's being caused by very very specific microeconomic forces you know there are literally specific people who as a reaction to a specific thing happening that makes production harder are

increasing their prices and this is a very different sort of you know this is a very very different theory of inflation than like any of the like 17 mainstream ones all of which are bad in various ways and yeah and there's there's one other thing i want to mention though that kind of isn't talked about in this model that is absolutely happening right now and that's um and then something that is really one of the drivers of inflation which is that uh corporations are raising prices because they think they can get away with it, and they're just pocketing the costs. And this isn't like a sort of speculative thing. Companies, when you ask them about it, are very, very open about it.

Here's from a Business Insider article. We are very good at his pricing, Colgate Palm of Oil CEO Noah Wallace said. Whether it's foreign exchange inflation or raw and packing material inflation, we have found ways over time to recover that in our margin line. We've been very comfortable with our ability to pass on the increases that we've seen at this point, said Kroger CFO Gary Millerchip in October. And we would expect that to continue to be the case. And here's something from the Wall Street, where more people talk about doing this. We have not seen any material reaction from consumers, Procter & Gamble finance chief Andre Scholten said last week, referring to a string of price increases that went into effect in September. So that makes us feel good about our relative position. Now, those two articles, like just those two articles alone, talk about prices raising – like talk about companies that are just raising prices because they know consumers will pay for it because they think there's inflation happening. And those companies just from those two articles alone include Procter & Gamble, Nestle, Verizon, Unilever, Colgate, Palm of Oil, Coca-Cola, Pepsi, Gillette, Chipotle, AT&T, Verizon, Kimberly-Clark Corp corp clorox reynolds kroger's and albertson

and like that that's just like the corporations in the article that are like specifically named as talking about having done this right and they can get away with this because normally normally right price increases to piss people off they go to go free for brands but if if prices across the board are already increasing uh you can you can you can just do basically a price gouge increase, and you can increase your markup, and it doesn't affect your goodwill because people just assume that inflation is already happening and that inflation happens sort of naturally. It's either because wages are too high, there's too much money in circulation, so there's just inflation happening. It's this abstract thing. abstract thing instead of what is actually happening which there are very specific like there are individual people with with names and addresses who specifically increase the price in order to screw you and that that that's that's what's actually at stake here in having an

explanation for why inflation happens it tells you who to blame for it like right now larry summers who's the former treasury secretary who was responsible for i arguably responsible for 2000 directly responsible for 2008 i one of people who completely annihilated the entire russian economy in the 90s uh he is has apparently been on the phone with joe biden and he is going around saying that in order to solve inflation we have to cut wages and raise the unemployment rate to five percent like for five years, like on average 5% for five years. And so this means either you have 5% of 5% – five years of 5% inflation, two years of inflation at 7.5% or like one year of 10% unemployment. And again, unemployment right now is at like 3%.

So he's talking about millions, potentially tens of millions of people losing their jobs in order to solve inflation because Summers because summers again summers is going back on the sort of phillips model shit right where inflation is caused by you know it doesn't even matter like what's actually causing the inflation which is a bunch of a combination of price gouging and like uh supply chain disruptions right he's going okay who his theory isn't about what is causing inflation his theory is about who's going to pay for it and his solution is fuck you you are going His theory is about who's going to pay for it. And his solution is, fuck you, you are going to pay for it. You are going to pay for both the price increases, which the prices won't fucking come back down. That's the other part of this, right? Once you get inflation, once the prices rise, they're sticky.

They don't fucking fall. And what he's saying is, yeah, fuck you. You are going to pay for it. You're going to continue to pay these prices. You're also going to pay for it by reducing your wages. You're going to pay for it you're going to continue to pay these prices uh you're also going to pay for it by uh reducing your wages you're going to pay for it by getting fired and you know this is this is sort of the choice that we have right it's either we let the ruling class tell exactly the same stories about why inflation happens they've been telling 50 years that they know are wrong that they that they know are so wrong they are desperate enough to turn to fucking marxism to

try to find explanations for it or we find a new explanation of why fucking inflation happens and we go back and we take the stuff that they've stolen from us and then we expropriate the bastards so they don't do it again and that is what I have to say about inflation yeah

I mean again what we need to do is if we organize as a people and as a people become the vacuum tube that we need to shove down the esophagus of Summers and other members of the ruling class in order to inflate their organs so that their asshole widens. And we can collectively. Fuck them. Until they deflate. Is that more or less accurate? Chris would you say? Economically?

Sure. I mean you know. Okay I would say. This is the thing about having an explanation. For why inflation happens right. It doesn't matter if it's true or not. As long as you have a compelling enough explanation for inflation to cause people to do something, you can – I mean this is one of the things, for example – this is one of the things that caused Tiananmen to happen is that there was skyrocketing inflation and the workers had an explanation of inflation. It wasn't right.

an explanation of inflation it wasn't right like yeah i mean their explanation for inflation had to do with like the like china was taking in a bunch of loans and the ccp was spending all their money on sports cars and it's like it's kind of marginal whether it was like true or not but it doesn't matter right and inflation could be caused by the fact that we haven't fucking inflated uh enough yeah we haven't enough right on on that point and this is this is this is 100% true you can look this up online so the original DuckTales game from 1989 was remastered

in 2013 and it was released on August 13th 2013 the remaster of the DuckTales game 1313 both unlucky numbers i think that could have just just as much to do with our current economic problem around inflation as basically anything else chris has said here um because august 13th 2013 ducktales getting released

scrooge mcduck main main character that is too much to be a coincidence yeah we are through the looking glass I can see the fnords there's no getting away from this one look all you have to do is you just gotta go you gotta show up to the room where the fucking money is

and you gotta take it from them you gotta show up to the fucking factories and inflate your bosses and you will inflation will come down yeah good work everybody it could happen here as a production of cool zone media for more podcasts from cool zone media

visit our website coolzonezonemedia.com, or check us out on the iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts. You can find sources for It Could Happen Here updated monthly at coolzonemedia.com. Thanks for listening. You should probably keep your lights on for Nocturnal Tales from the Shadow. Lights on for Nocturnal Tales from the Shadow. Join me, Danny Trejo, and step into the flames of right. An anthology podcast of modern day horror stories inspired by the most terrifying legends and lore of Latin America.

Listen to Nocturnal on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.