Category: inflation

  • By Russell Palmer, RNZ News digital political journalist

    Prime Minister Chris Hipkins has put the “bread and butter” issue of inflation at the top of his government’s agenda for Aotearoa New Zealand, saying today’s figures confirm that is the right approach.

    Opposition leader Christopher Luxon continues to cast the government as having done nothing about the cost of living, but Hipkins argues the government’s actions are making a difference.

    Annual inflation numbers for the quarter out from Stats NZ today were unchanged at 7.2 percent, roughly in line with expectations.

    There are signs inflation may have peaked, and some supermarkets are expecting drops in fruit and vegetable prices in coming weeks, but rate rises and recession are still expected.

    Economists say there is unlikely to be much respite from rising costs this year.

    Speaking in his first media briefing as prime minister after chairing Cabinet, Hipkins said the work on reprioritising policy to tackle the issue had “started in earnest”.

    “We will be reining in some of our plans, putting them on a slower track, giving us more room to move and greater capacity to focus on the immediate priority issues facing New Zealand, particularly the cost-of-living pressures that have been caused by the global economic situation.”

    Not unusual
    He said the inflation numbers from today were not unusual in comparison to other global economies — but the government would continue to work to reduce it.

    “Our overall rate of inflation: 7.2 percent here in New Zealand, 7.8 percent in Australia, 10.5 percent in the United Kingdom, the OECD average is 10.3 percent, the European Union is 11.1 percent,” he said.

    “The Treasury is forecasting real government consumption will fall by about 8.2 percent over the next couple of years which they say indicates that fiscal policy is supporting monetary policy in dampening inflationary pressures — but there’s more to do and the fight must and will continue.

    “New Zealand is not immune to those international pressures and they will continue to have an impact on our rate of inflation.”

    Luxon was earlier visiting a budgeting service in Papakura, Auckland, and led his comments to reporters afterwards with a familiar litany of criticism, saying those using the service were the same people using foodbanks up and down the country.

    “Again a third quarter of inflation sitting at 7.2 percent or thereabouts. It just speaks to a government that is causing huge pain and suffering for people because it has no plan and it’s not tackling the underlying issues of inflation,” he said.

    Christopher Luxon at a media standup in Papakura in Auckland
    Opposition leader Christopher Luxon . . . “a government that is causing huge pain and suffering.” Photo: Nick Monro/RNZ News

    “That then leads to higher levels of interest rates. Higher levels of interest rates ultimately then lead us through to a recession and a recession then leads us into unemployment. I see a government that has had no plan to tackle the underlying causes of inflation, and nothing they have done over the last nine months has made a single difference here.”

    He was not buying Hipkins’ language about reprioritisation and renewed focus on the economy.

    ‘It’s just words’
    “He can say whatever he wants, it’s just words. The reality is this is a government with Grant Robertson as a Finance Minister over the whole period of this government.

    “Nothing’s changed, so the reality is he can say whatever he wants but I find it incredibly cynical that here we are six months, seven months out from an election and all of a sudden we’re miraculously gonna focus on the economy. Give me a break.”

    Luxon listed National’s “five-point inflation-fighting plan” as their own solution to the problem:

    • Not adding costs to businesses which will be passed on to consumers through higher prices
    • Open up immigration settings to grow the productive economy
    • Control government spending “incredibly well and tightly as we expect people to do in their household budgets”
    • Inflation-adjusted tax thresholds
    • Refocus the Reserve Bank solely on inflation

    Hipkins argued the government had been doing its part to address the underlying causes, including at the petrol pump and the supermarket, and it was having an impact.

    He listed fuel tax cuts, and changes to benefit rates as examples where the government had stepped in, and said while it was too early to see the results of changes to immigration from a month ago, he had heard positive feedback from businesses.

    More changes
    He said the government would not stop there and would continue to make changes — and May’s budget was not set in stone.

    “There is an opportunity for us to make sure that the Budget reflects the priorities that I’ve set out,” he said, while drawing a line between carrying out the policy promises of this term of government — and campaigning for the next.

    “In terms of our tax policy for the next election New Zealanders will know it well in advance of the election. I’m not going to announce a tax policy on day one.”

    He signalled he would not forget other priorities — highlighting climate change as well as education, health and housing — but all of them were linked to cost-of-living pressures, he said.

    “If you look at the inflationary figures today the cost of building a new house is one of the things that’s contributing to that.

    “We’ve seen significant population growth and we haven’t built the right number of houses to keep up with that, that’s never going to turn around overnight but we’re making good progress.”

    Luxon targeted the closure of the Marsden Point Oil Refinery as one area the government had not thought through the consequences of, however, with shortages of CO2 and Bitumen impacting some sectors of the economy.

    Strategic assets
    “There are some strategic assets that actually are important to New Zealand and actually in the context of more global uncertainty you want to make sure you’ve got resilience and you’ve got the backup to the backup to the backup.

    “I’m used to running risk management scenarios . . . I get it, we want to move out of fossil fuels, but actually at the moment we’ve knocked off our gas sector and now we’re importing what, three times as much Indonesian coal as any year in a National government?”

    “The ambition’s easy to state but actually if you don’t think through the detail of it you end up with these consequences that cause us a different set of problems.”

    Hipkins certainly has a big job ahead of him in wrangling an inflation juggernaut powered in large part by similar rises in costs overseas.

    While he refused to make any commitments on his first day in the job, he was confident New Zealand would soon see the effects.

    “New Zealanders will certainly see over the coming weeks and months the evidence of the fact that we’ve made it our number one priority.”

    This article is republished under a community partnership agreement with RNZ.

  • RNZ News

    Incoming Prime Minister Chris Hipkins of Aotearoa New Zealand has signalled tackling the “inflation pandemic” will be a top priority for his cabinet’s slimmed-down work programme.

    Hipkins and new Deputy Prime Minister Carmel Sepuloni — the first with a Pasifika heritage — will take the reins on Wednesday, following Jacinda Ardern’s sudden announcement last week she was quitting after a challenging five years in the top role.

    It was perhaps the cleanest transfer of power in the Labour Party’s recent history, and a far cry from the post-Helen Clark, pre-Ardern years of infighting and headline-grabbing leadership tussles.

    “Jacinda Ardern and I are both absolutely committed to providing strong and stable leadership to New Zealand,” Hipkins told RNZ’s Morning Report today.

    “I think that’s what they’ve seen from the Labour government over the past five-and-a-half years, and that’s what they’re going to continue to see.”

    While in 2020 Ardern led the party to the most comprehensive victory of any in the MMP era and still leads polls for the most-preferred prime minister, those same polls suggest Labour is on track to lose the election later this year.

    With polls also showing the cost of living and inflation are far more important to voters than the likes of Three Waters reform and merging state-owned media entities, Hipkins said it was time to “run the ruler” over the government’s work programme.

    Need to focus
    “We need to focus in on some of those bread-and-butter issues that New Zealanders are certainly focused on at the moment, including issues like the cost of living, the effects of the ongoing global inflation pandemic that we’re experiencing at the moment.

    “We just have to make sure that we’re putting our resources into the things that are going to make the biggest difference and that are the most important.”

    Asked if tackling inflation could come in the form of “tax relief” or toning down the Labour government’s rapid increases to the minimum wage, Hipkins said he would not make up policy “on the fly”, but would be careful to make “sure that the policy settings that the government has aren’t going to make the inflationary problem worse”.

    But he hinted those on the lowest incomes wouldn’t be a target for reining in inflation, which — as he noted with the phrase “inflation pandemic” — is a global problem.

    “People on the lowest incomes often feel the pinch from higher inflation more than most because they don’t have a lot of extra disposable income to meet those additional costs.”

    As for public servants, many he said were in pay discussions at present so he could not comment.

    Another global issue New Zealand has not been immune to is the worker shortage. Hipkins said he would not “simply rely on immigration as being the only answer” to that particular problem.

    “They want more skilled workers, but they also want to know that their sons and daughters, and their classmates and so on, are also going to find productive, gainful employment… I don’t think it’s and either-or…

    “We’ve got thousands of young New Zealanders at the moment who aren’t doing anything. We’re going to have to have a bigger focus on making sure we activate that potential labour force, which at the moment isn’t there.”

    ‘Take a breath’
    Asked if the Ardern-led government had moved too fast on social issues, Hipkins said while “worthy and valuable, we can’t always progress them all at the same time” and it was time to “take a breath”.

    But he would not say which programmes might be scaled back or scrapped, having yet to meet with his new Cabinet.

    Opponents of the Three Waters reforms however are likely to be disappointed – Hipkins saying that will still go ahead.

    “Some of the rates increases people could see without further reform in this are could be … thousands of dollars a year extra on their rates if we don’t do something to address this issue. I’m not going to walk away from that.

    “But I will run the ruler over what we’re currently proposing to make sure that we’re focused in on the right issues.”

    A few articles published over the weekend suggested Hipkins’ political views were to the right of Ardern. On having that put to him, Hipkins said labels like that “don’t mean a lot”.

    “I’m a Labour politician. I believe in the role of government to support New Zealanders, to make sure that they have opportunity . . .

    “I absolutely believe in the values the Labour Party was founded on, which is that we are here for people who are working hard to get ahead and create a better life for themselves and their families.”

    This article is republished under a community partnership agreement with RNZ. 

    This post was originally published on Asia Pacific Report.

  • Our forefathers turned their debts into currency. That Constitutional approach could work today.

    On Friday, Jan. 13, Treasury Secretary Janet Yellen wrote to Congress that the U.S. government will hit its borrowing limit on Jan. 19, forcing the new Congress into negotiations over the debt limit much sooner than expected. She said she will use accounting maneuvers she called “extraordinary measures” to keep U.S. finances running for a few months, pushing the potential date for default to sometime in the summer. But she urged Congress to get to work on raising the debt ceiling.

    Lifting it above its current $31.385 trillion limit won’t be easy with a highly divided and gridlocked Congress. As former Republican politician David Stockman crowed in a Jan. 11 article:

    15 [House] votes and the slings and arrows of MSM opprobrium were well worth it. That’s because the GOP’s anti-McCarthy insurrection obtained concessions which just might slow America’s headlong rush to fiscal armageddon. And just in the nick of time!

    We are referring, of course, to the Speaker elect’s promise that there will be no more debt ceiling increases without off-setting spending cuts; and that in the event of a double-cross a single Member of the House may table a motion to vacate the Speaker’s chair.

    Even if Congress succeeds in raising the debt ceiling, the Federal Reserve’s aggressive interest rate hikes are likely to push interest on the federal debt to unsustainable levels. The problem was detailed by the House Republican Policy Committee like this:

    As of December 8, 2022, the U.S. gross national debt stood at nearly $31.5 trillion, $8.5 trillion higher than it was just three years before and the highest level in our nation’s history. Last year [in March 2021], the Congressional Budget Office (CBO) projected the federal government would spend $282 billion servicing our debt in 2022, but that projection ballooned to nearly $400 billion as the Federal Reserve tightens monetary policy and the debt continues to grow.

    … While interest rates have been low by historical standards, if interest rates rose to 5 percent, where they were as recently as 2007, net interest payments on the current debt level held by the public would be over $1 trillion, more than the federal government spends annually on everything but Social Security [emphasis added; endnotes omitted].

    San Francisco Fed President Mary Daly said during a live-streamed interview with the Wall Street Journal that she expects policymakers to raise interest rates to somewhere above 5%, and JPMorgan CEO Jamie Dimon said it “may very well” raise rates to 6%.

    The global debt cycle has reached the stage where, historically, a major “monetary reset” has been required. In 1913, it was done by instituting the Federal Reserve to backstop a banking system unable to meet withdrawals in gold. In 1933, it was done by taking the dollar off the gold standard domestically; in 1969, by taking the dollar off the gold standard internationally; and in 2008-09, by bailing out the banks with quantitative easing.

    Resetting the Game Board in Line with the Constitution

    What about today? In a Jan. 11 article in Forbes, after discussing the limitations of the “extraordinary measures” to which the Treasury can resort, investment advisor Simon Moore wrote:

    Some have also argued that the government could go further, perhaps invoking the 14th Amendment, or minting an enormously high-​value coin as further strategies to sidestep debt ceiling issues. However, these ideas are untested …

    The 14th Amendment says the validity of the government’s debt shall not be questioned. Fixing the budget deficit by minting some trillion dollar coins would be a radical monetary “reset,” but the approach is not actually untested. Abraham Lincoln did something similar to avoid a usurious national debt at 24 to 36% interest during the Civil War, and he was drawing from the playbook of the American colonists a century earlier.

    Article 1, Section 8, of the U.S. Constitution says, “The Congress shall have Power … To coin Money [and] regulate the Value thereof …“ When the Constitution was ratified, coins were the only officially recognized legal tender. By 1860, coins made up only about half the currency; and today, they make up only about $1.19 billion of a $21.352 trillion circulating money supply (M2). These coins, along with about $239 million in U.S. Notes or Greenbacks originally issued during the Civil War, are all that are left of the Treasury’s money-creating power.

    The vast majority of the money supply today is created privately by banks as deposits when they make loans, usurping the power to issue the national money supply from the people to whom it constitutionally belongs. Lincoln avoided a massive debt to private British-backed banks by restoring the government-issued money of the American colonists. In the 1860s, these newly-issued U.S. Notes or Greenbacks constituted 40% of the national currency. Today, 40% of the circulating money supply would be $8.5 trillion. Yet, this massive money-printing during the Civil War did not lead to hyperinflation. Greenbacks suffered a drop in value as against gold, but according to Milton Friedman and Anna Schwarz in A Monetary History of the United States, 1867-1960, this was not due to “printing money.” Rather, it was caused by trade imbalances with foreign trading partners on the gold standard.

    The Greenbacks aided the Union not only in winning the war but in funding a period of unprecedented economic expansion. Lincoln’s government created the greatest industrial giant the world had yet seen. The steel industry was launched, a continental railroad system was created, a new era of farm machinery and cheap tools was promoted, free higher education was established, government support was provided to all branches of science, the Bureau of Mines was organized, and labor productivity was increased by 50 to 75 percent.

    Congress could avoid its debt crisis today by calling for a new issue of debt-free U.S. Notes. That, however, would require legislation, probably a greater uphill battle in the current Congress, even than getting the debt ceiling lifted.

    Reducing the Federal Debt

    Another way to alleviate the debt crisis with government-issued money was proposed by Republican presidential candidate Ron Paul and endorsed by Democratic Representative Alan Grayson during the last debt ceiling crisis: the Federal Reserve could be ordered to transfer to the Treasury the federal securities it has purchased with accounting entries through “quantitative easing.” The Treasury could then just void this part of the debt, which stood at $6.097 trillion as of Dec. 2, 2022. That alternative would be legal, but it would require persuading not just Congress but the Federal Reserve to act.

    A third alternative, which could be done very quickly by executive order, would be for the federal government to exercise its constitutional power to “coin money and regulate the value thereof” by minting one or more trillion dollar platinum coins.

    The idea of minting large denomination coins to solve economic problems was first suggested in the early 1980s by a chairman of the Coinage Subcommittee of the House of Representatives. Not only does the Constitution give Congress the power to coin money and regulate its value, he said, but no limit is put on the value of the coins it creates.

    In 1982, Congress chose to choke off this remaining vestige of its money-creating power by imposing limits on the amounts and denominations of most coins. But it left one exception, the platinum coin, which a special provision allowed to be minted in any amount for commemorative purposes (31 U.S. Code § 5112). When Congress was gridlocked over the debt ceiling in 2013, attorney Carlos Mucha proposed issuing a platinum coin to capitalize on this loophole; and the proposal the proposal got picked up by Paul Krugman and some other economists as a way to move forward.

    Philip Diehl, former head of the U.S. Mint and co-author of the platinum coin law, confirmed that the coin would be legal tender. He said:

    In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years … under power expressly granted to Congress in the Constitution (Article 1, Section 8).

    What about Inflation?

    Prof. Randall Wray explained that the coins would not circulate but would be deposited in the government’s account at the Fed, so they would not inflate the circulating money supply. The budget would still need Congressional approval. To keep a lid on spending, Congress would just need to abide by some basic rules of economics. It could spend on goods and services up to full employment without creating price inflation (since supply and demand would rise together). After that, it would need to tax — not to fund the budget, but to shrink the circulating money supply and avoid driving up prices with excess demand.

    An alternative for stabilizing the money supply and avoiding inflation without resorting to taxes was developed by the Pennsylvania colonists in Benjamin Franklin’s day. The American colonies were then printing paper scrip, following the innovative lead of Massachusetts in 1691. This paper money was considered an advance against taxes, but it was easier to issue the scrip than to collect it back in taxes; and the result was to inflate and devalue the currency.

    The Pennsylvania colonists avoided price inflation by forming a “land bank.” The colonial government issued paper scrip in return for goods and services, and it lent scrip to the farmers at a reasonable rate. The interest returned to the colonial treasury, balancing the budget.

    Today we could do the same: we could offset the money issued for government expenses with interest instead of taxes. But that would effectively mean nationalizing the banking system, again not something that is likely or even desirable in a major economy with many competing economic interests. As U.K. Prof. Richard Werner observes, nationalizing the banking system in Soviet Russia did not work out well. But the Chinese approach, involving many small local public banks, proved to be very efficient and effective; and German local bankers developed such a system long before the Chinese, with their network of local public Sparkassen banks. We could follow suit with a network of public banks spreading to local needs, thus turning banking into a public utility while keeping credit under local management and distribution.

    We Could Go Further…

    As the chairman of the Coinage Subcommittee observed in the 1980s, the entire federal debt could actually be paid with some large denomination coins. Again, the concern will be that it will inflate the money supply and devalue the currency;  but the Federal Reserve showed after the “Great Recession” that it could issue trillions of dollars in accounting-entry quantitative easing without triggering hyperinflation. Indeed, the exercise did not trigger even the modest inflation for which it was designed.

    Japan has gone further. As of May 2022, 43.3% of its national debt was held by the Bank of Japan; yet its consumer price index (the annual percentage change in the cost of consumer goods and services) was at negative 0.2%. And China increased its money supply by nearly 1800% over 24 years (from 1996 to 2020) without driving up price inflation. It did that by increasing GDP in step with the money supply.

    As with QE, paying off the federal debt with trillion coins deposited in the Treasury’s account would just be an asset swap, replacing an interest-bearing obligation (bonds) with a non-interest-bearing one (bank deposits paid to the bond sellers). The market for goods and services would not be flooded with “new” money that would inflate the prices of consumer goods, because the bond holders would not consider themselves any richer than before.Joseph Wang, a former senior trader on the Fed’s open market desk, explained the difference between QE and direct payment of stimulus checks in a Jan. 9, 2023 article. He wrote:

    The enormous fiscal stimulus in 2020 created a few trillion out of thin air and just gave it away to the public – predictably supercharging growth and inflation.  Note that fiscal stimulus is very different from QE, which merely exchanges Treasuries for cash. QE changes the composition of liquid assets held by non-banks (fewer Treasuries, more cash), but not their purchasing power. In contrast, stimmy checks and forgivable loans are essentially free “helicopter money” that increase potential demand.

    QE changes the composition of liquid assets held by non-banks (fewer Treasuries, more cash), but not their purchasing power.” The non-bank holders of Treasuries could have sold their securities at any time if they had wanted cash. They had their money in government securities in the first place because they wanted to save it rather than spend it. If they were cashed out, they would presumably continue to save the money, probably by investing it in other interest-generating securities.

    Something to Think About at Least

    Granted, those proposals are unlikely to pass now, and it would take unusual courage just to introduce them; but we are living in unusual times. The time will soon come for bold leaders to take the reins and do something radical. The alternative that is barreling down on us is the World Economic Forum’s “Great Reset,” in which “you will own nothing and eat bugs” (basically neo-feudalism).

    The status quo is clearly unsustainable, and the Fed’s current tools cannot set it right. The inflation problem has been thrust in its lap, although fiscal spending and supply shortages are key drivers of today’s price hikes; and the Fed’s traditional tools won’t fix those problems. The higher that interest rates are raised, the harder it will be for people and businesses to pay their credit card debts. That means businesses will go bankrupt, people will get laid off, and tax receipts will go down, further driving up the budget deficit.

    We need a new approach, at least one that is new in modern times. We would do well to return to the solution of our forefathers – a monetary system backed by “the full faith and credit of the United States,” a government “of the people, by the people, and for the people,” as Lincoln intoned. That may not be the government we have now, but it could be and should be. Before we can have a trustworthy national currency, we need a transparent and accountable government that is responsive to the will of the people. When the old system finally breaks and we are primed for a new one, those are the principles that should guide us in its development.

    The post Solving the Debt Crisis the American Way first appeared on Dissident Voice.

    This post was originally published on Dissident Voice.

  • By: MICHAEL TUBBS

    I grew up in the shadows of a Dr. Martin Luther King Boulevard in Stockton, Calif. My neighborhood was shaped by great people, but terrible policies: It had more liquor stores than grocery stores, schools that were underfunded, and the biggest government investment was in policing rather than in opportunity.

    Years later, when I became mayor of my hometown in 2017, I walked into City Hall every day by crossing that same Dr. Martin Luther King Boulevard. And while I did all in my power to provide opportunity and dignity to every person living in Stockton, I was met with opposition from naysayers who applaud Dr. King’s dream in theory on days like today but who act in ways counter on others, voting against building affordable housing, making college free and accessible for our students, reversing decades of redlining, and providing second chances to formerly incarcerated people.

    On this Dr. Martin Luther King Day, I’m struck by this irony—of celebrating his life and legacy without real action; of platitudes delivered without real purpose; and of talking about Dr. King’s dream without waking up and doing the work of making it a reality.

    The reality we grapple with today is the result of nearly 50 years of sleeping on Dr. King’s dream. His dream married both economic and racial justice yet unfettered capitalism continues to leave far too many folks behind. While poverty does not discriminate, it does disproportionately impact Black people, and we have a black and white racial wealth gap that’s nearly the same today as it was at the time of the March on Washington in 1963. The unemployment rate remains stagnant for Black Americans and even increased for Black women in Dec. 2022. Black homeownership rates continue to fall, and fewer than half of Black adults say they have the recommended three months emergency fund.

    It’s past time we bring Dr. King’s economic dream to life, not by naming streets after him in the most marginalized parts of our communities, but by ending poverty and establishing a guaranteed income.

    Guaranteed income is a monthly cash payment given directly to individuals. It is unconditional, with no strings attached and no work requirements. In 1967, Dr. King called for a guaranteed income as the simplest and most effective solution to poverty, noting that its myriad of benefits included “a host of positive psychological changes inevitably will result from widespread economic security.” Dr. King continues to explain, “The dignity of the individual will flourish when the decisions concerning his life are in his own hands, when he has the assurance that his income is stable and certain, and when he knows that he has the means to seek self-improvement.”

    In 2017, I announced the nation’s first guaranteed income pilot, the Stockton Economic Empowerment Demonstration. 50 years after King’s call for a guaranteed income, many posited that the idea was too radical and nothing more than a dream. A pandemic and recession later, public perception has shifted and we are closer to a guaranteed income than we have ever been. The organization I founded, Mayors for a Guaranteed Income, is now more than 100 mayors strong and has launched dozens of pilots across the country. All together, these pilots will deliver more than $210 million in guaranteed income to Americans of every creed.

    Mayors for a Guaranteed Income just released data from 20 mayor-led pilots, showing that guaranteed income provides the freedom and flexibility Americans need to afford their basic needs, climb up the economic ladder, and pursue their dreams. Recipients spend over 80% of the extra cash on paying for the cost of everyday items—food, household goods, medical supplies, transportation, and housing. Less than 1% of spending went to tobacco or alcohol.

    In Dr. King’s hometown of Atlanta, Ga., for instance, Deontrez relies on guaranteed income to pay for his daughter’s diapers and now earns more money because he could afford to take his Commercial Driver’s License test. Monica, a previously unhoused single mom in Tacoma, Wash. is using her guaranteed income to provide her daughter with safe housing and keep up with car payments.

    As inflation continues to hit low-income Americans hardest, guaranteed income is an effective tool to offset rising costs for those who can least afford it. Many recipients have incomes at or near the poverty line, but don’t qualify for traditional social safety net programs. So they fall through the cracks. The average income for all participants in our pilots is barely 14 thousand, just above the federal poverty line for individuals.

    In 2021, we even saw the federal government offer a guaranteed income to nearly every parent in America through the expanded Child Tax Credit. The program led to a historic drop in child poverty, in record time. Congress, however, failed to codify this expansion, and millions of children who had a glimpse of financial security were thrust back into the nightmarish reality—a parent who is working two to three jobs but still not affording to keep the lights on or put food on the table.

    We know the answer to Langston Hughes’s question, “What Happens to a Dream Deferred?” We saw it in the storming of the U.S. Capitol on January 6, 2021; we see it in the stripping of a woman’s right to bodily autonomy; we see it voter disenfranchisement and in the pervasive poverty and wealth inequality. On this day, we have the opportunity to wake up and make Dr. King’s dream of a community for all of us a reality. We have the ability and, moreover, the responsibility to create policies rooted in love and an understanding of the dignity of every single person. As Dr. King said, “God never intended for one group of people to live in superfluous inordinate wealth, while others live in abject deadening poverty.”

    This post was originally published on Basic Income Today.

  • As the cost of living crisis continues, new research has told poor people what they already knew: that financially, they’re screwed. However, what the data does do is shine a useful light into just how bad things are.

    Cost of living crisis: dire straits

    Torsten Bell is the chief executive of think tank the Resolution Foundation. The group does a lot of research into how government policy affects the poorest people. Now, Bell’s team has crunched some more numbers. He tweeted that 65% of the poorest fifth of people have no savings at all:

    This has hardly changed since 2016-18, at a time when the poorest people who were in bad health could save even less. However, it’s no surprise that poor people can’t save any money. This is because they spend more on everyday costs than all other groups – from housing to food – and the least on “recreation”:

    weekly expenditure by decile

    Soaring inflation has hit the poorest people the hardest. So their ability to save is directly linked to income, as Office for National Statistics (ONS) data has shown:

    Median income across deciles

    Falling into arrears

    However, Bell showed another problem: that the poorest people are also often behind on their bills:

    Again, it’s no surprise that people reliant on social security are in the worst position regarding paying bills. This is because successive Tory governments have repeatedly frozen benefit rates, cutting them in real terms. Similarly, polling commissioned by the BBC found that 32% of social housing tenants had fallen behind with utility bills in the past six months during the cost of living crisis. Between 2016 and 2018, the poorest fifth of people had the highest rates of “problem debt”, despite having the least money. This is likely to be the same now. Yet as Bell pointed out, the government helps the poorest people the least when it comes to savings:

    The end result of this is financial chaos for the poorest people.

    A catastrophe

    The BBC carried out a poll, but didn’t check whether people were rich or people. The poll found that:

    Half those asked paid for at least some of their Christmas and holiday season spending on credit.

    And:

    A third of respondents to the poll who used credit to help get through Christmas and the holiday season said they were not confident about their ability to repay.

    This leads to a deterioration in people’s mental and emotional wellbeing. Search engine optimisation agency BlueArray reported that surveying showed that:

    when asked if they are worried about affording essentials such as food, clothing, housing, and travel over 84% are worried with 36% of these being extremely worried.

    It also found that:

    87% of those surveyed say financial stress is impacting their mental health with 26% of those saying it impacts them a lot.

    2023 is going to be a disaster for countless people during the continuing cost of living crisis. With no savings, little meaningful government support, and energy bills set to go up again, the poorest people are running out of places to turn. So, it will be left to communities and not-for-profit groups to pick up the pieces.

    Featured image via pixabay

    By Steve Topple

    This post was originally published on Canary.

  •  

          CounterSpin221230.mp3

     

    Janine Jackson: Welcome to the best of CounterSpin for 2022. I’m Janine Jackson.

    All year long, CounterSpin brings you a look, as we say, behind the headlines of the mainstream news. We hope both to shine some light on aspects of news events, perspectives of those outside of power, relevant but omitted history, important things that might be pushed to the side or off the page entirely in elite media reporting.

    But it’s also to remind us to be mindful of the practices and policies of corporate news media that just make it an unlikely arena for the inclusive, vital debate on issues that matter that we need.

    CounterSpin is thankful to all of the activists, researchers, reporters and advocates who appear on the show. They help us see the world more clearly, as well as the role that we can play in changing it.

    This is just a small selection of some of them. You’re listening to the best of CounterSpin for 2022, brought to you by the media watch group FAIR.

    Janine Jackson: “Supply Chain Mayhem Will Likely Muck Up 2022”—that New York Times headline got us off to a start of a year of actual hardship, and a lot of obfuscation about that hardship’s sources. The pandemic threw into relief many concerns that it did not create—and offered an opportunity to address those concerns in a serious and not a stopgap way. Rakeen Mabud is chief economist and managing director of policy and research at Groundwork Collaborative. We talked with her early in the year.

    Rakeen Mabud

    Rakeen Mabud: “On these corporate earnings calls, what we hear CEOs and CFOs saying, in sector after sector, in company after company, is we can use the cover of inflation to jack up prices on consumers, and rake in the profits for ourselves, and pay out some good dividends for our shareholders.”

    Rakeen Mabud: So we’ve essentially spent 50 years handing our supply chain over to mega corporations. These companies have built a system that works for them, right, it works for padding their own profits, jacking up their profits, all spurred on by Wall Street, who really demanded short-term profit increases over all else.

    And so when you think about what a supply chain is for, usually most people would think, oh, it’s here to deliver goods and services. Well, that’s actually not what our supply chain was built to do. Our supply chain was built to really maximize what companies could get out of this, and the dividends that they can pay off to shareholders.

    And what that means is that they’ve essentially built this system that has no redundancy. It has no sort of flexibility for changes in an economy, such as a pandemic, or even something like a climate shock, right, which we’re unfortunately likely to see more of over the coming years and decades.

    And so there is what we call a just-in-time supply system, right? This is a supply system that is expected to deliver exactly the number of goods that are needed at exactly the moment that they’re needed.

    But with something like a pandemic, all of those predictions about what goods will be needed when go out the window. And that’s when you end up with supply shortages, that’s when you end up with bottlenecks.

    The consolidation piece of this is also really important. We have three ocean shipping alliances that carry 80% of the world’s cargo.  So there, if one of them goes down, you can see how that massively disrupt our global supply chain, but you can also see how that might jack up prices.

    And my team and I have combed through hundreds and hundreds and hundreds of corporate earning calls. And you really don’t have to take my word for it. There’s obviously a big, deep story here. But on these corporate earnings calls, what we hear CEOs and CFOs saying, in sector after sector, in company after company, is we can use the cover of inflation to jack up prices on consumers, and rake in the profits for ourselves, and pay out some good dividends for our shareholders.

    Embedded within that is also, let’s cut back on pay for workers. You saw Kroger do this, right? Kroger cut back on hazard pay, jacked up its prices, and then issued a bunch of stock buybacks.

    And so the issues facing workers and consumers, as well as these small businesses who aren’t able to negotiate better prices for the inputs that they’re selling in their stores, and are being hit by pandemic profiteering higher up the supply chain. These are all part of the same system, and it’s all rooted in what is essentially, in short, corporate greed.

    Janine Jackson: The ease with which US media step into saber-rattling mode, the confidence as they soberly suggest people other than themselves might just need to be sent off to a violent death, in service of something they can only describe with vague platitudes, should be disturbing. Bryce Greene’s piece, “What You Should Really Know About Ukraine,” got more than 3,000 shares on FAIR.org, and that’s because people needed to hear a different version of that story than what they were hearing.

    Bryce Greene

    Bryce Green: “Washington decided to expand anyway. And they were the only superpower left, there was no one to challenge them, so they decided they could do it. They ignored Russian objections and continued to enlarge the military alliance, one country at a time.”

    Bryce Greene: So this whole story of NATO expansion and economic expansion, it begins right after the Cold War and the dissolution of the Soviet Union. The US and Russia made a deal that NATO, the Cold War alliance, would not expand east past a reunified Germany. No reason to escalate tensions unnecessarily.

    But, unfortunately, Washington decided to expand anyway. And they were the only superpower left, there was no one to challenge them, so they decided they could do it. They ignored Russian objections and continued to enlarge the military alliance, one country at a time.

    And even at the time, Cold Warriors, like the famed diplomat George Kennan, warned that this was a recipe for disaster. It would make Russia feel trapped and surrounded, and when major nuclear powers feel trapped and surrounded, it doesn’t really make for a peaceful world. But as we all know, Washington isn’t in the interest of peace, and they did it anyway.

    In 2004, the US poured millions of dollars into the anti-Russian opposition in Ukraine. They funded media and NGOs supporting opposition candidates. And they did this using organizations like the NED, the National Endowment for Democracy, and USAID. These organizations are broadly understood to serve regime-change interests in the name of “democracy.”

    Now, in 2004, it didn’t work exactly, but Ukraine began to start making closer ties to the EU and US. And that process continued up to 2014.

    Shortly before the overthrow, the Ukrainian government was negotiating closer integration into the EU, and closer integration with the Western economic bloc. And they were being offered loans by the International Monetary Fund, the major world lending agency that represents private interests around the Western world.

    So to get those loans, they had to do all sorts of things to their economy, commonly known as “structural adjustment.” This included cutting public sector wages, shrinking the health and education sectors, privatizing the economy and cutting gas subsidies for the people.

    And at the time, Russia was offering a plan for economic integration to Ukraine that didn’t contain any of these strings. So when President Viktor Yanukovych chose Russia, well, that set off a wave of protests that were supported and partially funded by the United States. In fact, John McCain and Obama administration officials even flew to the Maidan Square to help support the protesters who wanted to oust the president and change the government.

    And what’s worse is that right after the protests started, there was a leaked phone call between Victoria Nuland, one of Obama’s State Department advisors, and the US ambassador to Ukraine, in which they were describing how they wanted to set up a new government. They were picking and choosing who would be in the government, who would be out.

    Well, a few weeks after that, the Ukrainian government was overthrown. And the guy who they designated as our guy, Arseniy Yatsenyuk, became the prime minister.

    So clearly, clearly, there’s a lot of US involvement in how the Ukrainian government has shifted over the last decade. After 2014, the Ukrainians opted to accept the IMF loans, they opted to further integrate with the EU economically. And Russia is watching all of this happen.

    And so immediately after the overthrow, the eastern regions in Ukraine, who were ethnically closer to Russians, and they speak Russian and they favor closer ties to Russia, they revolted. They started an uprising to gain more autonomy, and possibly to separate from the Ukraine entirely.

    The Ukrainian government cracked down hard. And that only fueled the rebellion, and so Russia sent in volunteers and soldiers to help back these rebels. Now, of course, Russia denies it, but we all know they are.

    And so since 2014, that sort of civil war has been at a stalemate, and every so often there would be a military exercise on the border by one side or another. But really nothing much has changed. And so this current escalation started because of the US involvement in the Ukrainian government’s politics.

    Janine Jackson: The Peace Corps issued a press release warning that African Americans looking to support Ukrainians should accept that they might face racism—because, sooprise, sooprise, of how we’re portrayed in US media.

    We talked about the basic story the world and the US hears about Black people, thanks to journalism—with Layla A. Jones, reporter at the Philadelphia Inquirer. She’s part of the papers’ “A More Perfect Union” project, online at Inquirer.com.

    Layla A. Jones

    Layla A. Jones: “This portrayal of urban environments definitely did fuel fear among viewers…. The way that TV news portrayed Black and urban communities really did affect—it does affect—people’s public opinions of Black people and of our communities.”

    Layla A. Jones: “Eyewitness News,” and then “Action News,” which came afterwards, went to more than 200 US cities, but also went international, that format. But, yeah, when it was coming up in the late ’60s, and then “Action News” in the early ’70s, at the same time, there was this suburbanization and white flight happening in urban centers, and for a variety of reasons. We were coming off of the civil rights movement, there was a change in industry and work in cities, but also the news was broadcasting city and urban life as something scary, as something very Black, as something dangerous.

    And I guess what we talk about in the piece is that this portrayal of urban environments definitely did fuel fear among viewers. They basically said, we proved in the lab that the more people watched local television news, the more likely they were to associate criminality with being Black, the more likely they were to support criminal justice policies that fuel mass incarceration, like longer sentences and even the death penalty. And so the way that TV news portrayed Black and urban communities really did affect—it does affect—people’s public opinions of Black people and of our communities.

    The important point to make is that what was happening when these formats were on the rise is really multi-layered. So, first of all, it was being run at the top, and even from the top, basically all the way down, by all white people. A lot of these people were very young, because 1965, 1970, this was brand new. So they’re all learning together.

    Then they’re intentionally trying to attract—and this is especially “Action News”—intentionally trying to attract a suburban audience and, locally, our suburbs are more white. So they’re trying to attract a white, suburban audience, because they believe that’s where the money is, and that’s what’s going to draw advertisers.

    We also looked at the commercials. A lot of the commercials in between these news segments featured white families, and white picket fences, and things that you don’t really see in the cities that they’re reporting about.

    So with all those layers going on, what “Action News” found to work for them, what shot them up past their competitor, “Eyewitness News,” was focusing happy, upbeat and community-oriented stories in the suburbs. So the stories about backyard festivals or charity events, they’ll have a photographer go out there just to cover those good events, to make those people feel seen, and to make sure they tune in and watch the news.

    At the same time, the stories that can fill up the time and the newscast and are easy, quick, close by and cheap to cover, which is literally what a veteran anchor Larry Kane told me, are crime stories. He was like, you know, the photographer would just shoot the blood, shoot the scene, you shoot the victim, whatever they have to say, and you can do it in 20 seconds. And speed was another element of this format.

    And so it created this dichotomy. And, again, I like to say that I don’t believe, from talking to anyone, that it was like, “We hate Black people and we just want to make them look bad.” I just think it was a complete carelessness, and then once they were told, because the stations had been told this is harmful, they never changed their approach. And I think that’s really important, too.

    Janine Jackson: As US media showed there is no playbook too dusty to pull out with their anti-Asian Covid coverage. We talked with Helen Zia, co-founder of American Citizens for Justice, and author of, among other titles,  Asian-American Dreams: The Emergence of an American People. We talked about the 40th remembrance and rededication of Vincent Chin’s murder, VincentChin.org.

    Helen Zia

    Helen Zia: “It became a national movement, really sparked a discussion, a movement that took the moment of the killing of Vincent Chin, and then the injustice that followed, but turned it into a civil rights movement, a human rights movement, that has still an impact today.”

    Helen Zia: It was a horrific killing, and not only that, but a continued miscarriage of justice, where the justice system failed at every turn for a young man who was killed and attacked on the night of his bachelor party because of how he looked at a time of intense anti-Asian hate. And all of that was very important. It brought attention to the whole idea that Asian Americans are people, that we are humans, that we are Americans, and that we experience racism and discrimination.

    But that’s not all that was important, because that event and the miscarriage of justice catalyzed a whole movement, a civil rights movement led by Asian Americans, with Detroit, Michigan, as the epicenter of that civil rights movement that reached all across America for Asian Americans, and also had a huge impact on, really, democracy in this country, in many, many different ways. And it represented the solidarity of people from all walks of life.

    We were in Detroit, now a majority Black city, back then was a majority Black city, and we had incredible support from the Black community, as well as the Arab-American community, multi-faith, multi-class, people from all walks of life, not only in Detroit. And then it became a national movement, really sparked a discussion, a movement that took the moment of the killing of Vincent Chin, and then the injustice that followed, but turned it into a civil rights movement, a human rights movement, that has still an impact today.

    And that’s why we’re talking about this. It’s to remember that moment, but the legacy as well—of people coming together in solidarity, with the idea that an injury to one is an injury to all, and we have a basic interest in joining together to ensure each other’s safety. That we are part of a beloved community, that no community should live in fear of violence or hate. And this notion of all our communities being so divided, can we ever be allies, let alone come together.

    And so that’s what we’re remembering: Let’s not forget that, actually, we have been in solidarity. And let’s take the lessons of that and move it forward to today, because we need that desperately.

    And that’s why we are saying it’s more than remembrance, it’s about rededication. It’s about taking the hard work that happened, and coming together in unity and in solidarity and building a movement. There’s nothing simple about that; there’s no Kumbaya. It really takes people working hard together to bridge understandings and undo misunderstandings, break down stereotypes and build a common understanding and a common bond between communities.

    And so when, as you say, communities are portrayed in the news or in TV or in movies, that this is just that community’s concern; it doesn’t involve other people…. Anti-Asian violence, well, hey, that’s just Asians. And we don’t even know that they’re Americans. We don’t even know that they were on this continent for several hundred years.

    And so I think you’re right, that’s a way of pigeonholing people and keeping us apart, instead of looking at the true commonality. If we talk about Vincent Chin or violence against Asian Americans, we also talk about Buffalo and we talk about Coeur d’Alene, and how ideas of white supremacy and even active white supremacist groups, they lump us together. They don’t see us as separate groups. They connect the dots in a very negative way. And so it’s really incumbent on all thinking people, and especially our media, to be able to connect those dots too, and not keep us separate.

    Janine Jackson: In September of this year, CNN hired John Miller as “chief law enforcement and intelligence analyst”—a clear message to Muslim communities and anyone who cares about them, given that as deputy commissioner of intelligence and counter-terrorism for the New York Police Department, Miller told a New York City Council meeting that “there is no evidence” that the NYPD surveilled Muslim communities in the wake of September 11, 2001. We listened, instead, to Sumayyah Waheed, senior policy council at Muslim Advocates.

    Muslim Advocates' Sumayyah Waheed

    Sumayyah Waheed: “He chose to basically spit in the face of Muslim communities who were harmed by this program. And he has basically been rewarded for it, by being hired by a major news outlet.”

    Sumayyah Waheed: It’s important to note he had choices in terms of how to respond to this, the request for an apology. He could have flatly refused it. He could have defended the NYPD’s program. I wouldn’t agree with that, either, but he could have done that.

    Instead, he chose to lie about something that’s well-documented. And as you said, specifically something that harms a marginalized community, the Muslims in the New York area, whose harms that they suffered from this massive surveillance echo through today.

    And this was not that long ago. This program started in the aftermath of 9/11, so about 20-plus years ago, and then the AP reported on it in, I think, 2012. They won a Pulitzer Prize for their reporting on it.

    And they reported with a treasure trove of documents, internal documents from the NYPD, some of which our organization utilized in our lawsuit against the NYPD for their spying. And a federal appeals court explicitly said that our client’s allegations were plausible, that the NYPD ran a surveillance program with a racially discriminatory classification.

    So he chose to lie about something that’s well-documented. He chose to basically spit in the face of Muslim communities who were harmed by this program. And he has basically been rewarded for it, by being hired by a major news outlet with a position that, I don’t even know how much he’s going to be compensated, but he’s now got a national platform to further spread lies.

    Just from our lawsuit—and our lawsuit was specifically for New Jersey Muslims who were affected by this, and there were other lawsuits for the New York Muslims, and there were Muslims outside of the New York and New Jersey area who were affected by this. But just from our lawsuit, we knew that the NYPD spied on at least 20 mosques, 14 restaurants, 11 retail stores, two grade schools and two Muslim student associations in New Jersey.

    So every aspect of Muslims’ lives was being surveilled, and the community finding out about this pervasive surveillance, that’s not something that you can just dismiss. The community basically was traumatized by this.

    And the result—there’s a Mapping Muslims report that actually goes into all the effects, some of the impacts on the Muslim community from this notorious program of surveillance. And they found that Muslims suppressed themselves, in terms of their religious expression, their speech and political associations.

    It sowed suspicion within the community, because people found out, you know, the person sitting next to me at the mosque was an informant. How can I go to the mosque and trust everyone there? Maybe I won’t go.

    Of course, it severed trust with law enforcement, and then contributed to a pervasive fear and unwillingness to publicly engage.

    So that you can’t just flip a switch on. If the NYPD actually wanted to address those harms, that would be a really long road to repair.

    And by having John Miller in his position, and not actually censuring him or firing him for those comments, the NYPD signaled the opposite, right, that they’re going to back somebody who doesn’t care to address the harms of the department.

    Janine Jackson: CounterSpin listeners understand that the news media situation in this country works against our democratic aspirations. There are many problems crying out for open, inclusive conversation in which those with the most power don’t get the biggest megaphone, and they don’t leave the vast majority of us outside of power to try and shout into the dominant noise.

    Corporate media work hard, will always work hard, to tell us that their space is the only space, their conversation is the only conversation, and that’s just not true.

    One of many projects we should know about that show us a way forward is one in New Jersey—that didn’t talk about shoring up old, traditional media outlets, but about instead about invigorating community information needs. The New Jersey Civic Information Consortium uses public funding to support more informed communities. We talked with an early mover on the project, Mike Rispoli, senior director of journalism policy at Free Press.

    Free Press's Mike Rispoli

    Mike Rispoli: “There are all these really profound effects on civic participation and the overall health of our communities when local media isn’t meeting people’s needs.”

    Mike Rispoli: In 2016, New Jersey was looking to sell some old broadcast public media licenses that it held, and in the selling of those state assets, the state received $332 million.

    And Free Press Action was doing some work in New Jersey at the time. We were organizing in communities, trying to find ways to have communities partner with local newsrooms, but also hold local newsrooms accountable.

    And so we were doing organizing around the state, and talking to people about the future of local news in New Jersey. And at that time, they’re set to receive this windfall from the sale of these TV licenses. And so we thought, hey, what would it look like if some of that money coming into the state was reinvested back into communities to address the growing gaps in news coverage and community information needs?

    And so with that, we began the idea of what became the Consortium, that ran a statewide grassroots campaign called the Civic Info Bill Campaign. And that work began in 2017.

    And obviously we all have seen and experienced and have been impacted by the loss of local news, especially over the past 20 years. And many communities have never been well-served, even in the “good old days of journalism.” There are many communities who were never, never really well-served by local media.

    And so when we were looking at this windfall that the state was going to receive, we thought, how could we use public funding to not just invest into local news, or to “save journalism.” But instead, what if we use public funding and public money to help rebuild and really transform what local media looks like in the state? How do we leverage public funding to invest in projects that are filling in gaps left by the commercial media market?

    I think that what we knew when we began this campaign was that if this was a campaign to bail out the journalism industry, that wasn’t a thing that people were going to get behind. That was a thing we didn’t even think lawmakers were going to get behind.

    But instead, really what we talked about was not the woes of one specific industry, but instead we talked about the impact on communities when local news and information is not accessible. And we know from data, when local media is deficient or disappears altogether, it has significant consequences on civic participation. Fewer people vote, fewer people volunteer, fewer people run for public office; fewer federal dollars go to districts where there’s no local media presence. Government corruption increases, government spending increases.

    So there are all these really profound effects on civic participation and the overall health of our communities when local media isn’t meeting people’s needs. And so we wanted to make the campaign, as well as the bill, really centered around that, as opposed to giving government handouts to corporate media who contributed so much to the mess that we are in right now, and that we’re trying to figure our way out of.

    Janine Jackson: And that’s it for the best of CounterSpin for 2022. I hope you enjoyed this look back at just some of the year’s conversations. It’s been my sincere pleasure to host them.

    Remember, you can always find shows and transcripts at FAIR.org. The website is also the place to learn about our newsletter Extra!, and, of course, to show support for CounterSpin if you’re able and so inclined. The show is engineered by Alex Noyes. I’m Janine Jackson; thank you so much for listening to CounterSpin.

     

    The post ‘It Takes People Working Together to Bridge Understandings and Undo Misunderstandings’ appeared first on FAIR.

    This post was originally published on FAIR.

  • A group of 50 Democrats has urged President Joe Biden to take aggressive action to ensure that renters are able to stay housed as rent and house prices have soared across the U.S. with little to no mitigation in recent years, creating a major housing crisis with no end in sight. In a letter sent Monday, spearheaded by Rep. Jamaal Bowman (D-New York) and Sen. Elizabeth Warren (D-Massachusetts)…

    Source

    This post was originally published on Latest – Truthout.

  • Inflation dominated news headlines and American psyches in 2022. Overall, consumer prices jumped an average 7.1 percent this year, with the cost of just about everything going up, from cars to coffee and gas to groceries. The trend triggered a bitter midterm election campaign, prompted a series of aggressive interest-rate hikes from the Federal Reserve, and fears about an impending recession.

    Source

    This post was originally published on Latest – Truthout.

  • Graduate students won a major raise after five weeks on strike. The victory is a product of the militancy that has pushed the union to the vanguard of organized labor in higher ed.

  • New data shows that the gap between the top wealthiest Americans and the working class reached new heights last year as multimillionaires in the top 1 percent experienced the highest wage raises in real, inflation-adjusted dollars while the wages of the bottom 90 percent fell. In 2021, the top 1 percent of earners saw their annual wages rise by 9.4 percent. The raise for the wealthiest of the 1…

    Source

    This post was originally published on Latest – Truthout.

  • RNZ Pacific

    Unions in New Caledonia have secured a 4.2 percent increase of the lowest salaries from January 1, 2023.

    The concession by the employers’ organisation MEDEF was announced as a large crowd rallied for a general strike outside its offices in Noumea.

    According to police, 1500 people had gathered to press their demands while the unions said they mobilised 5000 members.

    The unions had sought an across-the-board pay increase of six percent in the private sector to offset the impact of inflation, which in November was 4.4 percent.

    The wage hike applies to those earning between the monthly US$1440 minimum pay and those earning up to US$1775.

    MEDEF said inflation has hit businesses hard as production costs are rising faster than product prices, in particular with the rise in the cost of energy.

    Decline in GDP
    The organisation said New Caledonian companies faced a decline as GDP had dropped by 5.9 percent since 2018.

    MEDEF said the social partners became aware early on of the negative impact of imported inflation on the purchasing power of New Caledonians.

    It said that as early as May it and the unions unanimously and jointly asked the government to hold a conference on wages.

    MEDEF said since April there had been proposals for tax reform which combined economic recovery and resetting of net wages.

    It said raising wages had therefore always been a key aspect of the planned tax reform.

    The government plans to hold a conference next week to discuss reforms in view of the crisis facing public finances.

    This article is republished under a community partnership agreement with RNZ. 

    This post was originally published on Asia Pacific Report.

  • “There is no sense that inflation is coming down,” said Federal Reserve Chairman Jerome Powell at a November 2 press conference, — this despite eight months of aggressive interest rate hikes and “quantitative tightening.” On November 30, the stock market rallied when he said smaller interest rate increases are likely ahead and could start in December. But rates will still be increased, not cut. “By any standard, inflation remains much too high,” Powell said. “We will stay the course until the job is done.”

    The Fed is doubling down on what appears to be a failed policy, driving the economy to the brink of recession without bringing prices down appreciably. Inflation results from “too much money chasing too few goods,” and the Fed has control over only the money – the “demand” side of the equation. Energy and food are the key inflation drivers, and they are on the supply side. As noted by Bloomberg columnist Ramesh Ponnuru in the Washington Post in March:

    Fixing supply chains is of course beyond any central bank’s power. What the Fed can do is reduce spending levels, which would in turn exert downward pressure on prices. But this would be a mistaken response to shortages. It would answer a scarcity of goods by bringing about a scarcity of money. The effect would be to compound the hit to living standards that supply shocks already caused.

    So why is the Fed forging ahead? Some pundits think Chairman Powell has something else up his sleeve.

    The Problem with “Demand Destruction”

    First, a closer look at the problem. Shrinking demand by reducing the money supply – the money available for people to spend – is considered the Fed’s only tool for fighting inflation. The theory behind raising interest rates is that it will reduce the willingness and ability of people and businesses to borrow. The result will be to shrink the money supply, most of which is created by banks when they make loans. The problem is that shrinking demand means shrinking the economy – laying off workers, cutting productivity, and creating new shortages – driving the economy into recession.

    Demand has indeed been shrinking, as evidenced in a November 27 article on ZeroHedge titled: “The Consumer Economy Has Completely Collapsed – ‘It’s A Ghost Town’ for Holiday Shopping Everywhere.” But retailers have cut their prices about as far as they can go. While the rate of increase in producer costs is slowing, those costs are still rising; and retailers have to cover their costs to stay in business, whether or not they have customers at their doors. Rather than lowering their prices further, they will be laying off workers or closing up shop. Layoffs are on the rise, and data reported on December 1 showed that U.S. factory activity is contracting for the first time since the lockdowns of the Covid-​19 pandemic.

    It is not just activity in shopping malls and factories that has taken a hit. The housing market has fallen sharply, with pending home sales dropping 32% year-over-year in October. The stock market is also sinking, and the cryptocurrency market has fallen off a cliff. Worse, interest on the federal debt is shooting up. For years, the government has been able to borrow nearly for free. By 2025 or 2026, according to Moody’s Analytics, interest payments could exceed the country’s entire defense budget, which hit $767 billion in fiscal 2022. That means major cuts will be needed to some federal programs.

    Breaking the “Fed Put”

    In the face of all this economic strife, why is the Fed not reversing its aggressive interest rate hikes, as investors have come to expect? Former British diplomat and EU foreign policy advisor Alastair Crooke suggests that the Fed’s goal is something else:

    The Fed … may be attempting to implement a contrarian, controlled demolition of the U.S. bubble-economy through interest rate increases. The rate rises will not slay the inflation “dragon” (they would need to be much higher to do that). The purpose is to break a generalized “dependency habit” on free money.

    Danielle DiMartino Booth, former advisor to Dallas Federal Reserve President Richard Fisher, agrees. She stated in an interview with financial journalist and podcaster Julia LaRoche:

    Maybe Jay Powell is trying to kill the “Fed put.” Maybe he’s trying to break the back of speculation once and for all, so that it’s the Fed – truly an independent apolitical entity – that is making monetary policy, and not speculators making monetary policy for the Fed.

    The “Fed put” is the general idea that the Federal Reserve is willing and able to adjust monetary policy in a way that is bullish for the stock market. As explained in a Fortune Magazine article titled “The Stock Market Is Freaking Out Because of the End of Free Money – It All Has to Do with Something Called ‘The Fed Put’”:

    For decades, the way the Fed enacted policy was like a put option contract, stepping in to prevent disaster when markets experienced serious turbulence by cutting interest rates and “printing money” through QE [quantitative easing] .

    … Since the beginning of the pandemic, the Fed had supported markets with ultra-​accommodative monetary policy in the form of near-​zero interest rates and quantitative easing (QE). Stocks thrived under these loose monetary policies. As long as the central bank was injecting liquidity into the economy as an emergency lending measure, the safety net was laid out for investors chasing all kinds of risk assets.

    … The idea that the Fed will come to stocks’ aid in a downturn began under Fed Chair Alan Greenspan. What is now the “Fed put” was once the “Greenspan put,” a term coined after the 1987 stock market crash, when Greenspan lowered interest rates to help companies recover, setting a precedent that the Fed would step in during uncertain times.

    But the “free money” era seems to be over:

    The regime change has left markets effectively on their own and led risk assets, including stocks and cryptocurrencies, to crater as investors grapple with the new norm. It’s also left many wondering whether the era of the so-​called Fed put is over.

    Killing the Parasite That Is Killing the Host

    The Fed put favors the rich – investors in the stock market, the speculative real estate market, the multi-trillion dollar derivatives market. It favors what economist Michael Hudson calls the “financialized” or “rentier” economy – “money making money,” formerly called “unearned income” – which drives up prices without adding productive value to the “real” economy. Hudson calls it a parasite, which is sucking out profits that should be going toward building more factories and other economic development.

    By backstopping the financialized economy, the Fed has been instrumental in widening the income gap of the last two decades, pushing housing prices to heights that are unaffordable for first-time homebuyers, driving up rents and educational costs, and crushing entrepreneurs. DiMartino Booth explains:

    Fed policy feeds passive investing … because you don’t have to carefully allocate your resources. You simply have to be long the NASDAQ and sit there with your money. What does that feed? It feeds the monopolization of America. The largest companies, the companies such as Google and Microsoft … if there is a competitor in their world they simply absorb them. They acquire them, which quashes … the entrepreneurial spirit that made this country so great.… If the Fed succeeds, Main Street will be the main winner.

    … [T]he trick here is for the Fed to not break anything big, and that’s the delicate balancing act, … if … they can slowly, methodically take the rot out of the system without breaking anything big that forces them to pull back.

    The “rot” in the system is particularly evident in the housing market:

    Since the financial crisis, there’s been a lot of private equity that’s entered the space and snapped up all these homes and they’re renting them … It’s definitely exacerbated this housing cycle. It’s added an element of speculation because so many of them are all cash buyers. Don’t get me wrong, they’re levered — it is borrowed money — but they’re coming in as all cash buyers, and that I think created a lot of these massive bidding wars …

    DiMartino Booth discusses the risk of derivatives contagion using the example of AIG, a giant insurance company brought down by derivatives exposure in 2008:

    During the financial crisis … we rescued AIG because we didn’t want to actually see what it looked like on the other side of that cliff had derivatives actually been unwound, and what that contagion might have looked like.… We never tested the derivatives market, so that risk continues to lurk out there…. I’m not a cheerleader for there being some kind of a systemic risk event, and I do hope again that the Fed succeeds in managing this unwind, in seeing risk pulled out of the system, but one company at a time, not something that makes the global financial system implode.

    Financial blogger Tom Luongo takes this argument further. He maintains that Fed Chair Powell is out to break the offshore eurodollar market – the speculative, unregulated offshore money market where the World Economic Forum and “old European money” (including mega-funds Blackrock and Vanguard) get the cheap credit funding their massive spending power. That is a complicated subject, which will have to wait for another article; but the principle is the same. Without the backstop of the Fed’s virtually free dollars to satisfy a surge in demand for them, these highly-leveraged dollar investments will collapse. (“Leverage” is an investment strategy that uses borrowed capital to increase potential returns. The risk is that if the investment sours, losses are also increased.)

    Pushing “Until Something Breaks”

    Whether or not popping these raging speculative bubbles is the goal, the Fed’s interest rate hikes are having that effect. According to a November 25, 2022 article on CNBC.com, “Interest rate hikes have choked off access to easy capital ….” As a result, “Investors have lost roughly $7.4 trillion, based on the 12-month drop in the Nasdaq.”

    House prices are also tumbling. The third quarter of 2022 saw the biggest home equity drop ($1.3 trillion) ever recorded. Fortune Magazine quotes Moody’s Analystics: “Before prices began to decline, we were overvalued [nationally] by around 25%. Now, this means prices will normalize. Affordability will be restored.”

    In 2021, 25% of all real estate purchases were being made by institutional investors. In the third quarter of 2022, investor buying of homes tumbled 30%. Blackstone, a real estate income trust notorious for buying up homes and turning them into rentals, was reported on December 2 to be limiting withdrawals from its $125 billion property fund as investors rush for the exits. George Cipolloni, portfolio manager at Penn Mutual Asset Management, said the U.S. Federal Reserve’s sharp interest rate increases have not “worked all the way through the economy yet,” and that he expects to see “more Blackstone-type news events coming forward in the next year.”

    In May 2022, BlackRock stock (BLK) was down 30% for the year. And by November, the cryptocurrency market cap had plummeted from $3 trillion to $900 billion, with Bitcoin, its largest component, down 77% year-over-year.

    Currently featured in the news is the crypto exchange FTX and its 30-year-old billionaire owner Sam Bankman-Fried. FTX was exposed as a Ponzi scheme by the receding tide of dollar liquidity, catching Bankman-Fried and team “swimming naked when the tide went out.” According to Swiss bank UBS’ chief of investment, “FTX’s collapse shows Federal Reserve tightening is crushing speculative assets.” Outing FTX is thought to be only the beginning of a succession of exposures of financial frauds to come.

    The Delicate Balancing Act

    Looked at in that light, breaking the Fed put sounds like a good idea. But can it be done without breaking the whole economy? More reputable establishments than FTX are at risk. Rate hikes seriously impact local retailers and wholesalers. In September, risky leveraged bets brought UK pension funds near to collapse, forcing the Bank of England to reverse course and lower its interest rates. And there is the stress in the U.S. Treasury, which is dealing with an enormous interest tab on its debt.

    Other disturbing outcomes are being envisioned. One podcaster posits that the economy is intentionally being driven to collapse, at which point the government will declare a “bank holiday”as Pres. Roosevelt did in 1933. When the banks reopen, he says, we will have a “currency reset” in the form of a central bank digital currency (CBDC). The concern is that it will be a “programmable” currency, one that can be regulated or turned off altogether based on the user’s “social credit” score, as is already happening in China.

    Alarmed observers note that the New York Fed recently embarked on a pilot project for a CBDC (Central Bank Digital Currency). But defenders point out that it is a “wholesale” CBDC, used just for transfers between banks, particularly overseas transfers. Settlement times of foreign exchange transactions typically take two days. Project Cedar, the New York Innovation Center’s pilot project, found that settlement for foreign exchange transactions using distributed ledger technology can happen in 10 seconds or less, significantly reducing risks. Whether that technology will be developed and used by the Fed has not yet been determined. DiMartino Booth observes that Powell and other Fed officials have frequently questioned the need for a “retail” CBDC, in which Fed accounts would be opened directly with the public.In a Substack article titled “A Grand Unified Theory of the FTX Disaster,” author and educator Matthew Crawford lays out a darker possibility – that the end goal of the powerful network of players behind the FTX scheme is not just a U.S. CBDC but a “Global Digital Central Bank” run by international powerbrokers. Whether or not the Federal Reserve intended it, aggressive interest rate hikes could expose this sort of parasitic corruption and remove the money machine that is its power source.

    Rising from the Ashes

    Meanwhile, the supply-side issues inflating the prices of food, energy and other key resources need to be addressed. Those are matters for federal and state legislatures, not the Fed. In the 1930s, a federal financial institution called the Reconstruction Finance Corporation pulled the economy out of the Great Depression, put people back to work, and crisscrossed the country with new infrastructure, including the dams and power lines that brought electricity to rural America. (See my earlier article here.) The government acted quickly and decisively because times were desperate.

    A bill for a National Infrastructure Bank modeled on the Reconstruction Finance Corporation is now before Congress, H.R. 3339. For a local government bank, a viable model is the publicly-owned Bank of North Dakota, which pulled that state out of a regional agricultural depression in the 1920s. (See here.) As an iconic Depression-era poster declared, “We can do it!” We just need to roll up our sleeves and get to work.

  • This article was first posted on  ScheerPost.
  • The post What Does the Fed’s Jerome Powell Have Up His Sleeve first appeared on Dissident Voice.

    This post was originally published on Dissident Voice.

  • Federal public servants will start enterprise bargaining from next May. Many agencies have received only small pay rises of 2% a year, at most, throughout the nine years of Coalition government. Stanley Blair reports.

    This post was originally published on Green Left.

  • Originally published by The 19th A year ago, the expanded child tax credit ended. Between 2020 and 2021, the credit — which gave monthly payments of up to $300 per child — helped reduce child poverty by more than 40 percent. More than 36 million families received the credit in 2021, and the money helped push the child poverty rate below that of adults for the first time. But since the program…

    Source

    This post was originally published on Latest – Truthout.

  • The specter of inflation is haunting the world’s economies. Surging prices since 2020, especially in food and energy, have eroded global living standards, though inflation varies considerably across countries. However, inflation is hitting the working class and lower-income people harder than wealthier households, triggering protests around the world, especially in countries with strong trade unions and left-wing political parties. In Europe, governments fearful of social unrest have spent hundreds of billions of euros in an attempt to cushion the impact of inflation. The conservative government in Greece has even sought to restrain the increase in prices in more than 50 basic goods with a “household basket” plan. Meanwhile, in the United States — the richest country in the world — government policies to assist those suffering disproportionately from the surge in prices do not even exist.

    Why are prices rising, and why do experts think that high inflation isn’t going away anytime soon? Moreover, what type of policies would we expect from a truly progressive government in an effort to curb inflation and bring wages in line with inflation?

    Two leading leftist economists from the University of Massachusetts at Amherst, Gerald Epstein and Robert Pollin, shed light on these questions in this exclusive interview for Truthout. Epstein and Pollin are also co-directors of the Political Economy Research Institute (PERI) at UMass-Amherst, which on December 2-3 will host an international conference to explore the causes of inflation and what can be done about it.

    C.J. Polychroniou: Bob, the war on Ukraine has not only set back global recovery from the COVID-19 pandemic but also seems to have caused inflationary expectations to soar. Indeed, inflation is haunting most economies around the world, and there seems to be no end in sight for high prices. Why is inflation rising, and what are the main forces behind the creation of large price increases in food, the energy sector and even in housing?

    Robert Pollin: Sharply rising inflation rates emerged throughout the world coming out of the 2020-2021 COVID lockdown. According to the International Monetary Fund, the average inflation rate for the overall global economy rose from 3.8 percent in 2019, the year prior to the COVID pandemic onset, to 6.4 percent in 2021, as lockdown conditions from COVID started loosening, and 9.1 percent as of October 2022. For the large high-income economies (G-7 economies), inflation rose from 1.6 percent in 2019 to 5.6 percent in 2021 and to 6.8 percent as of October 2022. The comparable figures for the U.S. economy specifically are 2.1 percent in 2019, 7.4 percent in 2021 and 6.4 percent as of October 2022.

    Clearly, the first driver of inflation globally has been the unique economic conditions globally coming out of the COVID lockdown. In particular, the global economy emerged out of the lockdown with supply shortages for a wide range of goods, including oil, food and computer chips, since production of goods had been cut back sharply during the lockdown. On top of that, the shipping industry itself contracted during the lockdown, and has not been able to bounce back quickly. Within the U.S., a major drag has been that there has been, very simply, a shortage of truck drivers to deliver supplies. This has resulted because truck drivers are badly paid. Under COVID conditions, the job also became less safe. One easy solution here would be to raise the pay and improve the safety precautions for the drivers. More people would then want to show up and take these jobs. That still hasn’t happened. Russia’s invasion of Ukraine led to further global supply shortages, in particular for energy and food. This in turn created still more inflationary pressures.

    Right-wing commentators like to claim that large government spending levels caused inflation. This position is not entirely wrong, though it is misleading in the way that the right-wing pundits present it. In fact, government spending levels to counteract the COVID lockdown were historically unprecedented throughout the world, amounting to between 15 percent and 30 percent of all economic activity in all major economies. These were government spending levels equal to, if not greater than, World War II. They succeeded in creating a global floor on overall demand — that is, people did still have money in their pockets and bank accounts even while unemployment was spiking with the economic lockdown.

    In other words, overall demand did not fall as much as overall supply. This created a version of the classic mantra on inflation, as resulting from “too much money chasing too few goods.” But consider this problem relative to the alternative that would have resulted under the COVID lockdown in the absence of these government spending injections — i.e., “too little money and too many goods.” That would have produced a major deflation — i.e., falling prices, wages and incomes, along with huge increases in mass unemployment, bankruptcies and a global depression. I have lots of criticisms of the specific ways in which these COVID bailouts were executed. But we are far better off as a result of this government spending, even recognizing how inflation has followed, then to have allowed a global deflation and depression to result.

    Under these circumstances of COVID-lockdown and war-related supply shortages, corporations in turn seized the opportunity to mark up their prices and pad their profits margins. Focusing on the U.S. economy, the Financial Times reported on November 28 that, “Margins of retailers and wholesalers have exploded in the past two years. The basic story here is that a combination of broken supply chains, rising input costs, and high demand created pricing power for producers, who raised mark-ups. Those mark-ups … are fueling inflation.” The economist Josh Bivens at the Economic Policy Institute has confirmed this pattern for the U.S., calculating that 54 percent of the price increases for corporations has been due to rising profit margins.

    Polychroniou: Can inflation in today’s world be controlled by the actions of national governments? If so, what might a progressive government in the United States be able to do to make prices go down, or otherwise, to increase benefits and wages in line with inflation?

    Pollin: The first issue to consider here is how much we should need or want prices to come down. In a paper that I will be presenting at the PERI conference, my coauthor Hanae Bouazza and I show that, considering 130 countries over the 61-year period from 1960-2021, economies have consistently grown at faster rates when inflation ranges between 5 percent and 15 percent as opposed to between 0 percent and 2.5 percent. Generally, this is because when an economy is operating at a high level of activity — with low unemployment rates and strong public sector support — inflation will tend to be somewhat faster. This is not a serious problem as long as workers’ wages and living standards are at least keeping pace with inflation. And as I noted above, this is a far less serious problem than when unemployment is high and wages and living standards are eroding, even while inflation may be at 2 percent or less.

    In fact, since the mid-1990s, all high-income countries have been operating under what is termed an “inflation targeting” policy framework. These economies have all set their “inflation targets” at 2 percent inflation. The premise here is that economies perform better when inflation is negligible to nonexistent. But in fact, we have seen in the U.S. that, along with low-to-zero inflation between the early 1990s until the COVID reopening, the buying power of workers’ wages remained stagnant, while the pay for corporate CEOs rose exorbitantly, from being 33 times higher than the average worker in 1978 to 366 times higher in 2019. This is a more than tenfold increase in relative pay for corporate CEOs. So, the 2 percent inflation target has primarily been a means of keeping workers’ bargaining power weak and enabling profits and CEO pay to explode.

    Within this context, it is not surprising that the primary response of policy makers to the global inflationary spike has been to try forcing their economies’ inflation rate down to the 2 percent target rate. Specifically, this has entailed central banks raising the short-term interest rates that they control for the purpose of weakening overall demand in the economy and raising mass unemployment. With mass unemployment rising, worker bargaining power — and along with it, the labor costs faced by businesses — would be expected to decline. Federal Reserve Chair Jerome Powell acknowledged these policy aims clearly, if demurely, in a major speech last August. Powell predicted then that there would “very likely be some softening of labor market conditions” resulting from the Fed raising interest rates.

    Despite this singular focus by the Fed and other central banks on raising interest rates and unemployment, this is by no means the only policy tool available that could effectively manage inflation. The Biden administration itself has proposed enacting windfall profit taxes and stricter enforcement of regulations already in place to control corporations monopolistic pricing power. These would counter the excessive mark ups over costs that corporations have been able to impose over the past two years. Additional policy tools could include direct controls in the short term of some key prices, such as oil, along with tighter enforcement of speculation trading on futures markets for oil and food. Still more, increasing infrastructure investments can serve to loosen supply-chain bottlenecks in the short run while raising productivity over the longer term. Advancing a green energy transition — including investments in both energy efficiency and renewable energy — will reduce dependency on volatile fossil fuel markets while also driving down CO2 emissions.

    It is possible that these other measures do not operate as forcefully as raising interest rates and unemployment for bringing inflation down to the 2 percent target rate. But the evidence shows that it is not typically necessary to force down inflation to such low levels. Moreover, all of these alternatives offer the critical advantage that they can reduce inflationary pressures without forcing up unemployment rates. It is also critical to note that inflation has been coming down since July. In the U.S., the average rate for the past four months has been 2.7 percent (expressed on an annual basis). At the least, this pattern demonstrates that there is no further need for the Fed to continue trying to force up unemployment in the name of inflation control. Rather, the combination of less stringent inflation-control policies should be more than sufficient now to continue bringing inflation down to an acceptable level.

    Polychroniou: Jerry, there are some economists who argue that monetary policy has been the neglected factor behind the recent surge in inflation. Is this a valid argument, especially with regard to inflation in the United States? Moreover, how do central banks control inflation, and how do you assess the role, so far, that central banks and the Fed in particular have played in combatting inflation? It appears that working-class people, globally, are getting the short end of the stick with the policies pursued by central banks in the fight against inflation.

    Gerald Epstein: The Federal Reserve has two broad areas of responsibility: one is with regard to monetary policy and the second involves financial regulatory policy, which includes both the monitoring and enforcement of financial regulations. When it fails to implement or enforce its regulations sufficiently, then it bails out the financial institutions and markets that have engaged in reckless behavior and are teetering on the edge. Here it is playing its role as “lender of last resort” or more accurately, as the “bailor-in-chief.” To bail out these banks and markets, the Fed tries to keep interest rates very low so they can borrow money cheaply. This also gives banks and wealthy financiers the opportunity to borrow money cheaply and buy and trade financial assets, leading to the massive increases in financial wealth we have observed until recently in the period following the great financial crisis of 2007-2009. Up until the time when Russia invaded Ukraine, the Federal Reserve’s mixture of monetary policy, regulatory (non-) policy and bail-outs led to a gigantic “asset inflation,” but not much of an inflation in the cost of goods and services. The one exception to this may have been in the case of housing and real estate, whose increase in prices were probably partly driven by these low interest rates.

    But when supply chain problems from the pandemic hit and Russia’s invasion took hold, then commodity inflation took off. Now the Fed saw that its game of inflating the wealth of the wealthy with low interest rates and bailouts would no longer suffice. The problem: The accelerating inflation was harming the real value of wealth held by the top 1 percent and richer strata. The Fed responded by significantly raising interest rates to slow inflation and to try to protect the wealth of the wealthy. But as Bob Pollin explained, this came at the expense of slower employment growth and even higher unemployment for workers.

    As Bob explained, the standard of living of workers and the poor have been significantly hurt by increases in the cost of living associated with the war and supply problems, but higher interest rates, designed to help the wealthy, will only hurt the workers more. Home mortgage costs, interest rates on credit cards and slower wage growth will be the result.

    Polychroniou: Assuming you were in a position to affect policymaking in the fight against inflation, what measures would you recommend as an economist of the left?

    Epstein: Since Bob discussed this in general, I will focus here on what the Federal Reserve could do. It is often said that the Fed has only one tool — interest rates — and so that is what it is using to fight this inflation. But this is not correct. As the Fed amply showed during the great financial crisis and the onslaught of the COVID pandemic — as well as in previous periods such as during World War II — the Fed has a number of tools in addition to interest rates: these include subsidized lending, asset buying, direct lending for productive purposes, and other more technical tools like asset-based reserve requirements designed to subsidize some lending and penalize other types. If the Fed had the notion (and the political will to pull it off in the face of a potentially hostile Congress), it could lend subsidized credit or buy assets from specialized nonprofit banks devoted to providing low-cost housing; it could provide working capital or buy longer term assets from organizations in communities providing subsidized solar energy and insulation for residences and community buildings; it could provide subsidized credit for farmers and rural communities that are producing healthy food and developing distribution networks that bypass the mega-middle men — buyers, grocery stores etc. that are using their market power to rise food prices. These are just a few examples.

    The point is that the Federal Reserve has a huge amount of creative lending and investment strategies during the recent crises mostly to help banks and other financial institutions, but also municipal governments, small businesses and the like, and they could do this again to do two things: Help subsidize key commodities for the working class and poor, and also help increase the supply of key commodities — green energy, healthy food, etc. — that will improve the standard of living of workers in the medium to longer term.

    Punishing increases in interest rates are not the only tool the Fed can use, but it is the tool it is choosing.

    This post was originally published on Latest – Truthout.

  • Reserve Bank governor Philip Lowe apologised to those who took out home loans on the basis of his promise not to raise interest rates. But he had no apology for wage earners trying to make ends meet amid sharply rising prices. Peter Boyle reports.

    This post was originally published on Green Left.

  • The IMF has debunked the myth that heightened inflation means workers should accept below-inflation wage rises — real wage cuts. Neville Spencer reports.

    This post was originally published on Green Left.

  • On Wednesday 16 November, the Tory government dragged the country back to the 1970s – even though it was supposed to be Jeremy Corbyn that would do so with his nationalisation and public spending. But no, the Tories have taken us back nearly fifty years – and the reason for this is inflation.

    Red scare

    Who can forgot the right-wing media’s response to Labour leaking its election manifesto in 2017? As HuffPost reported at the time, the likes of the Telegraph and the Daily Mail had a go at Corbyn’s plans:

    Of course, a Corbyn-led government might have partly avoided the mess we’re now in. However, lets forgot the 2017 Labour manifesto and instead look at the party in power – and the mess they’ve made. It’s one which has now seen inflation hit some of its highest levels since the 1970s.

    Flares, disco, and a three-day working week: back to the 70s we go

    The Office for National Statistics (ONS) said on the morning of 16 November that inflation had increased to 11.1% in October. Inflation in this context is the Consumer Prices Index (CPI). The ONS said that food, housing, and energy prices were driving the rise in inflation. It noted that specifically for housing and housing costs (which includes energy), the increase was the highest on record – beating the previous one set in 1975. The ONS said that:

    In October 2022, households are paying, on average, 88.9% more for their electricity, gas, and other fuels than they were paying a year ago.

    It’s a similar story for food, with the ONS saying the increase in those prices is the highest since 1977:

    Food inflation October 2022

    When we look in detail, it’s food staples that are hammering people. The table below shows that things like bread, flour, pasta, milk, cheese, and eggs have all increased in price by percentages higher than overall inflation:

    Detailed inflation increases

    As always, it’s poor people hardest hit by inflation. The ONS noted that the cost of petrol and diesel had continued to fall – the only area of inflation where there was a significant decrease:

    Changes to inflation by indices

    As the Canary previously reported, the fall in petrol prices benefits the rich most – as the majority of poor people don’t own cars. So, the inflation chaos is all looking very Tory – and it’s only going to get worse.

    A bleak outlook for many

    Chancellor Jeremy Hunt is giving his autumn statement on Thursday 17 November. This is where he’ll set the government’s economic policies. People are predicting that Hunt and the Tories will:

    What this means is that the Tories are going to be hammering most of us with more austerity and income cuts. On top of skyrocketing inflation this will likely tip countless more people into destitution. We’ve got to this point largely thanks to the Tories – be it their disastrous Brexit, Liz Truss’s self-made economic carnage, or the decade of austerity and wage-squeezes which preceded all this. And now, we’re leaving it to them to try and get us out of this mess. 1970s Corbyn seems quite nice now, doesn’t it?

    Featured image via Steve Topple – screengrab and Richard Townshend – Wikimedia, cropped under licence CC BY 3.0

    By Steve Topple

    This post was originally published on Canary.

  • Labor has done very little to reverse the Kennett-era health and education privatisation spree, the consequences of which have led to a overloaded health system and a crisis-ridden education system. Arie Huybregts reports.

    This post was originally published on Green Left.

  • Members of the Australian Nursing Federation Western Australia will start day long work stoppages on November 17 as part of its enterprise bargaining agreement negotiations with the WA Labor government. Chris Jenkins reports.

    This post was originally published on Green Left.

  • U.S. voters seem to have defied expectations of handing a midterm defeat to Democrats, who lost less seats in the House and Senate than expected. Voters also rejected election deniers in governor’s races in Wisconsin, Pennsylvania, Arizona and Michigan. And, in probably the biggest win for reproductive justice, voters in Kentucky appear to have rejected a state constitutional amendment that would have eliminated abortion rights, and 56 percent of Michiganders voted for Proposal 3, enshrining abortion care into their state constitution.

    However, our political situation remains rather muddled. The Republicans are likely to win the House and could still win the Senate. At best, we are still looking at a divided Congress, and it is hard to imagine such an institution solving the problems affecting peoples’ daily lives, such as inflation, rising living costs and the climate crisis. A divided Congress won’t stem the continued trend of fascist politics.

    Even if the absence of a red wave offers some relief, we still must remain vigilant against reactionary politics. The GOP will continue its post-2020 efforts to defeat movements for racial, economic, reproductive and climate justice. Since the 2020 uprisings for Black lives, the GOP has launched campaigns against anti-racist protests under the guise of combating anything it deems to be “critical race theory.” In a chilling (yet rather unsurprising) development, this right-wing effort has led to the banning of books covering topics related to race and LGBTQIA+ issues.

    This midterm season saw a concerted push from the GOP to discredit the Movement for Black Lives, and to restore law enforcement legitimacy. Republican candidates have run political ads that make conservative media consultant Larry McCarthy — the mind behind George H. W. Bush’s “Willie Horton” ad — look timid. Living in the Pennsylvania television market, I watched my fair share of ads running footage of groups of individuals committing acts of violence and falsely portraying Pennsylvanian Democratic candidates John Fetterman and Josh Shapiro as advocates of defunding the police, and thus “soft on crime.” (This claim seemed especially spurious considering Shapiro served as Pennsylvania’s attorney general, and he brags about arresting “more than 6,500 drug dealers” on his campaign website. Moreover, Fetterman said he “never believed” in defunding the police, calling the idea “absurd.”)

    However, few in the GOP tied the issue of crime, anti-Blackness and movements for Black liberation together quite like Alabama Sen. Tommy Tuberville, who told a crowd of Trump supporters at an Alabama rally in October, “[The Democrats are] pro crime. They want crime. They want crime because they want to take over what you got…. They want reparations because they think the people that do the crime are owed that. Bullshit. They [Black Americans] are not owed that.”

    Unfortunately, what we may see is the parties joining together to pass legislation in their efforts to restore the legitimacy that law enforcement lost after the killings of Breonna Taylor and George Floyd in 2020, by extending more funding and expanding police forces. We cannot forget that Democrats like President Joe Biden, Mayors Lori Lightfoot and Eric Adams, as well as Rep. Abigail Spanberger of Virginia (a former CIA officer), have spoken out stridently against defunding the police.

    And lest we forget, Biden has not needed GOP encouragement to adopt “law-and-order” policies. His Safer America Plan would put 100,000 more police onto the streets and mandate nearly $11 billion for law enforcement. House Minority Leader Kevin McCarthy’s Commitment to America plan would enlist 200,000 police.

    These midterms are unlikely to stop Republican elected officials, activists and media personalities from articulating neo-Nazi ideas of “replacement theory.” And it’s highly unlikely that they will stop raising the temperature by continuing to embrace the violent white power militias within their coalition.

    We are living in a conjuncture, a moment of overlapping crises. While we might be living “in-between” protests against racist state violence, we’re still in a moment of reactionary politics despite the failure of a red wave to materialize. The world is burning.

    The U.S. Supreme Court has taken away reproductive rights, opening the door to criminalizing abortion care and expanding the carceral state. It also stands to roll back affirmative action.

    The COVID pandemic-induced economic crisis has led to the return of inflation at 1970s levels. Corporations and landlords have taken advantage of the supply glut and increased demand by further increasing the costs of goods, energy and rent, hurting many working-class Americans. Oil companies like ExxonMobil have posted record profits. As Truthout’s Sharon Zhang reports, “three of the largest five shipping companies increased their profits by a staggering 29,965 percent, an increase of nearly 300 times their pre-pandemic profits.” To add insult to injury, the Federal Reserve has raised interest rates yet again, which tends to hurt workers disproportionately. Inflation and feelings of insecurity either due to the economy and/or threats of violence adds to feelings of uncertainty surrounding the future.

    However, movements for racial, economic and gender justice can steer us through these volatile times. So far, SCOTUS’s horrifying decision to rescind Roe v. Wade has spurred more reproductive justice activism and organizing. The passage of Michigan’s Proposal 3, as well as Kansas voters’ refusal to codify a de facto abortion ban its constitution, might offer a model to formally legalize abortions in states with sympathetic majorities. These votes also might buoy abortion rights activists and organizations abroad.

    Contemporary social justice movements also might be able to continue to operate effectively when not exposed to the noise of national discourse. Few in the national mainstream media seem to notice that there’s an ongoing uptick in labor struggle: There have been more strikes in 2022 (at least 316) than last year (257).

    The Debt Collective, an organization with roots in the Occupy movement, helped push the Biden administration to cancel some student debt (although the measure is currently tied up in the courts).

    And, based upon protests in response to Donald Trump’s sexual violence, his administration’s attempts to ban Arab, Muslim, African, Mexican and Central American immigration, as well as the Dobbs v. Jackson Women’s Health Organization decision, the GOP’s far right agenda might provoke the growth of left opposition. The GOP’s efforts to till the ground for a Trump presidential campaign in 2024 — encouraging election denialism, advocating for national abortion bans, attacking student debt cancelation and continued assaults on “wokeness” — will provide further opportunities for mass action. We must continue to encourage more people to get involved in these types of struggles, and support the groups and organizations that lead these efforts. This requires offering people an on-ramp from one-off protests to movement building and organizational life. And, in doing so, it will require an effort to engage more people in the political education and training needed to expand a base that can challenge authoritarianism, settler colonialism, patriarchy and racial capitalism. Additionally, we will have to harness the disruptive power of protest and turn it into sustained political power. To paraphrase Howard Zinn, activists must look toward the optimism of uncertainty.”

    No political outcome is foreordained. While the odds will remain stacked against us in a reactionary and politically divided nation, we never know when the next conflagration is around the corner.

    This post was originally published on Latest – Truthout.

  • The European Union’s Foreign Policy Chief Josep Borrell is not particularly perceived by the EU’s political elite or mainstream media as a rightwing ideologue or warmonger. But seen through a different, non-western prism, it is hard not to mistake him for one.

    Borrell’s recent comments that “Europe is a garden” and that “the rest of the world is a jungle” were duly condemned as ‘racist’ by many politicians around the world, but mostly in the Global South. Borrell’s remarks, however, must also be viewed as an expression of superiority, not only of Borell personally, but of Europe’s ruling classes as a whole.

    Particularly interesting about the EU top diplomat’s words are these inaccurate depictions of Europe and its relationship with the rest of the world: “We have built a garden”, “everything works” and “the jungle could invade the garden”.

    Without delving too deep into what is obviously an entrenched superiority complex, Borell speaks as if an advocate of the so-called ‘Replacement Theory’, a racist notion advocated by the West’s – Europe especially – rightwing intellectuals, which sees refugees, migrants and non-Europeans as parasites aiming to destroy the continent’s supposedly perfect demographic, religious and social harmony.

    If stretched further into a historical dimension, one also feels compelled to remind the EU leadership of the central role that European colonialism, economical exploitation, political meddling and outright military intervention have played in turning much of the world into a supposed ‘jungle’. Would Libya, for example, have been reduced to the status of a failed state if the West did not wage a major war starting in March 2011?

    The imagined ‘jungle’ aside, Europe’s past and present reality strongly negates Borell’s ethnocentric view. Sadly, Europe is the birthplace of the most horrible pages of history, from colonialism and slavery to the nationalistic, fascist and nihilistic movements that defined most of the last three centuries.

    Despite the desperate attempt to rewrite or ignore history in favor of a more amiable narrative focused on great splendors, technological advancement and civilizational triumph, Europe’s true nature continues to smolder underneath the ashes, ready to resurface whenever the geopolitical and socioeconomic factors take a wrong turn. The Syrian and Libyan refugee crisis, the Covid pandemic and, more recently, the Russia-Ukraine war are all examples of the proverbial wrong turn.

    In fact, Borrell’s words, aimed to reassure Europe of its moral superiority, are but a foolhardy effort meant to conceal one of the most dramatic crises that Europe has experienced in nearly a century. The impact of this crisis on every aspect of European life cannot be overstated.

    In an editorial published last September on the European Environment Agency (EEA) website, Hans Bruyninckx described the “state of multiple crises” that characterizes the European continent at the moment. “It seems as if we have been living through one crisis after another — a pandemic, extreme heatwaves and drought due to climate change, inflation, war and an energy crisis,” he wrote.

    Instead of taking responsibility for this impending catastrophe, Europe’s ruling elites choose a different, though predictable route: blame others, especially the inhabitants of the non-European ‘jungle’.

    Naturally, ordinary people throughout Europe who are already experiencing this harrowing reality hardly feel reassured by Borrell’s proclamation that “everything works”.

    The risk of the resurgence of the far-right movements in Europe is now a real possibility. This danger was relatively mitigated by the setback of the extremist ‘Alternative for Germany’ and the victory of the Social Democrats in last year’s elections. Germany, however, is not the exception, as the European far-right is now back, virtually everywhere, and with a vengeance.

    In France, Marine Le Pen’s far-right party gained a record 41% of the total vote (over 13 million) in April. True, Emmanuel Macron managed to hold off the advance of Le Pen’s National Rally, but his coalition has lost its parliamentary majority, and his leadership has been significantly weakened. Currently, the country is rocked by massive rallies and strikes, all protesting the soaring prices and deepening inflation.

    Sweden is another example of the determined rise of the far-right. A right-wing coalition, which won the general elections last September, now dominates the country’s parliament. On October 17, it elected a new prime minister, Ulf Kristersson, whose government was made possible because of the support of the Sweden Democrats, a party with neo-Nazi roots and a harsh anti-immigration agenda. SD was crucial in determining the victory of the coalition and it is now suited to play the role of the kingmaker in critical decisions.

    In Italy, too, the situation is dire. A future government is expected to bring together Giorgia Meloni – the leader of Fratelli d’Italia (Brothers of Italy) – former right-wing Italian Prime Minister Silvio Berlusconi’s party, Forza Italia, and the extremist Matteo Salvini’s La Lega. Meloni’s party is rooted in the post-fascist tradition of the Italian Social Movement, which was formed in the aftermath of World War II by fascist politicians after their party was officially outlawed by the country’s progressive 1948 Constitution.

    The shifting political grounds in Germany, France, Italy and Sweden have little to do with the ‘jungle’, and everything with the illusory European ‘garden.’ Europe’s extremism is a by-product of exclusively European historical experiences, ideologies and class struggles. Blaming Asians, Arabs or Africans for Europe’s “state of multiple crises” is not only self-deluding, indeed spiritless, but also obstructive to any healthy process of change.

    Europe cannot fix its problems by blaming others, and the European ‘garden’, if it ever existed, is actually being ravaged by Europe’s own ruling elites – rich, detached and utterly dishonest.

    Romana Rubeo, an Italian journalist, contributed to this article.

    The post “Nothing Works”: Europe Must Stop Blaming Others for Its Own Crises first appeared on Dissident Voice.

    This post was originally published on Dissident Voice.

  • On October 21st, 2022, President Biden made an address regarding his administration’s historic deficit reduction. Let’s break it down. 

    This post was originally published on Real Progressives.

  • A new report from House Oversight Committee lawmakers confirms that corporate “profiteering” has been a major factor fueling inflation in the past two years, as executives have hid under the guise of inflation to fleece the public — all while bragging about it to their shareholders.

    The report was released Friday by the Oversight Committee’s Subcommittee on Economic and Consumer Policy. It found that many industries have increased their profits precipitously within the last two years, taking advantage of uncertainty caused by the pandemic and other factors that set the stage for “excessive corporate price hikes,” like Russia’s invasion of Ukraine, the report reads.

    Four major meat processors more than doubled their profits between 2019 and 2021, the report found, while two large rental car companies nearly multiplied their profits by six times. In the oil and gas industry, four major companies increased their profits by 62 percent.

    Underscoring much of the instability across the global economy was the shipping industry, which saw disruptions due to supply chain issues. Still, these companies were able to profit from the issues nonetheless: the report found that three of the largest five shipping companies increased their profits by a staggering 29,965 percent, an increase of nearly 300 times their pre-pandemic profits.

    These findings are staggering, even if they have become relatively normalized under runaway capitalism. They represent, as progressive analysts have said for months now, a failure of political forces to attempt to rein in such price hikes and provide much-needed relief to the public.

    “Today’s analysis reaffirms what an overwhelming 80 percent majority of Americans already recognize according to a recent poll: under the guise of inflation, certain corporations excessively hiked prices far beyond what their costs necessitated, further driving inflation,” subcommittee Chairman Rep. Raja Krishnamoorthi (D-Illinois) said in a statement. “It is unacceptable that certain companies and industries are engaged in extreme price hikes under the cover of inflation.”

    Corporate executives have been openly touting this strategy to shareholders, the report finds. Executives at companies like Hormel Foods, Tyson Foods, Autozone, and others have explicitly drawn the line between inflationary conditions and raising prices and profits in calls with shareholders, as the report points out.

    “[A] little bit of inflation is always good in our business,” one Kroger executive said in June 2021. A Tyson official said in February that “Our pricing actions and strength in the beef segment … more than offset the higher [costs of goods and services].”

    “Inflation is going to be a big factor for us next year,” one executive at beverage company Constellation Brands said early this year. “We’ll take as much pricing as we think the consumer can absorb.”

    In other words, while the working class has struggled to afford basic needs like rent, food and energy in recent years, corporations have viewed such conditions as an opportunity to even further squeeze the public for their money. Further, they’re not afraid to admit as such, openly discussing these plans in shareholder calls.

    The report is drawn from testimony and evidence from left-leaning organizations like the Economic Policy Institute and the Roosevelt Institute, which have indeed found that corporations are in large part responsible for inflation.

    However, even economists in traditionally conservative spaces have been citing corporate greed as a driver of high prices. Paul Donovan, the chief economist at UBS Global Wealth Management, strongly urged the Federal Reserve to recognize this fact in an op-ed last week, writing that, because of inflation, “real wage growth is catastrophically negative” and that companies “have also taken advantage of circumstances to expand profit margins.”

  • The economy added 261,000 jobs in October, somewhat faster than most analysts had expected. Despite the rapid job growth, unemployment edged up slightly to 3.7 percent. Perhaps most importantly, it seems wage growth is settling down to a level consistent with the Fed’s 2.0 percent inflation target. Over the last three months, it has increased at a 3.9 percent annual rate. That compares to a 3.4 percent rate in 2019, when inflation was comfortably below the Fed’s target.

    Airlines, manufacturing and construction are ahead of their pre-pandemic job levels but government employment still lags - chart

    Job Growth Led by Health Care and Manufacturing

    Job growth was strong across sectors, but it was especially strong in health care and manufacturing. Health care added 52,600 workers in October, and it has added 298,800 workers since May. This is largely catch-up since the sector’s employment had lagged earlier in the recovery. It is now 0.5 percent above the pre-pandemic level.

    Manufacturing added 32,000 jobs in October, and employment in the sector is now 1.1 percent above the pre-pandemic level. Manufacturing is usually hit hard in a recession, but to date does not seem to have been much affected by the Fed’s rate hikes.

    Construction Employment Edges Up, Jobs Related to Mortgage Financing Fall

    Higher interest rates have certainly taken a toll on construction, as is most evident in the plunge in housing starts. Nonetheless, employment in the sector increased by 1,000 in October, with residential construction showing a small gain. Employment is now 1.3 percent above pre-pandemic levels. Workers are still needed to finish the many homes that are still under construction.

    The impact on the credit intermediation sectors that are involved in mortgage issuance is easier to see. The number of people working in these sectors fell by 4,400 in October and is now down 36,600 from its April peak.

    Airlines Add Jobs, Internet Retailers Lose Jobs

    The airline industry added 4,200 jobs in October. Employment is now 10.6 percent above its pre-pandemic level, even though air travel is still below pre-pandemic levels. Employment at Internet retailers fell by 300 in October, as people are switching back to in-store shopping and also buying fewer goods. It is now down 0.6 percent from its peak last November, but still 10.6 percent above the pre-pandemic level.

    Sectors Having Trouble Hiring Are Now Adding Jobs

    Nursing homes added 4,100 jobs in October, while childcare centers added 4,900. Employment in the sectors is still down by 13.7 percent and 8.4 percent, respectively. The low pay in these sectors have made it difficult to get workers.

    Local governments added 29,000 jobs in October, while state governments lost 7,000. They are now 3.3 percent and 1.1 percent below pre-pandemic employment levels, respectively.

    Restaurants added just 6,000 jobs in October, but this followed an increase of 69,000 in September. This is likely just an error in the data rather than a sharp plunge in job growth. Employment is still 4.6 percent below the pre-pandemic level. Hotels added 19,900 jobs in October, but employment is still 17.1 percent below its pre-pandemic level.

    Women Accounted for 66.1 Percent of Payroll Employment Growth in October

    Women again accounted for the bulk of payroll job growth in October. They have accounted for 59.3 percent of job growth since May. They now are 49.91 percent of payroll employment. There were some months before the pandemic when women held more than 50.0 percent of payroll jobs.

    Weekly Hours Stable in October

    Average weekly hours were stable at 34.5 in October. This is down from a peak of 35.0 earlier in the recovery. This is another sign of the labor market normalizing. It suggests employers are not making workers put in more hours due to an inability to hire new workers.

    Wage Growth Nears Noninflationary Pace

    The annual rate of wage growth over the last three months is just 3.9 percent. This rate is very close to being consistent with the Fed’s 2.0 inflation target. (It is somewhat higher at 4.4 percent, using my preferred measure of taking the average wage for the last three months, compared to the average of the prior three months.)

    Hourly wage growth was 3.4 percent in 2019, when inflation was comfortably below the Fed’s 2.0 percent target. By this measure, the Fed’s work is largely done.

    Labor Force Participation Edges Down, Prime Age Participation Drops 0.2 Percentage Points

    The overall labor force participation rate edged down 0.1 percent to 62.2. The participation rate for prime age workers fell 0.2 percentage points to 82.5 percent. This is 0.6 percentage points below the pre-pandemic peak, but equal to the average for 2019.

    Share of Unemployment Due to Voluntary Quits Falls

    The percentage of unemployment due to voluntary quits fell sharply in October to 14.6 percent. This number is erratic, but the October figure is consistent with a strong, but normal labor market.

    Employment Rate for Workers with Disabilities Hits a New Record High

    The employment rate for people with disabilities rose to 22.0 percent in October. This is a new record high. This is likely due to a combination of a strong labor market and a huge expansion in opportunities for work from home.

    Average Duration of Unemployment Spells Rises

    For the first time since April, both the average duration of unemployment spells and the share of long-term unemployed (more than 26 weeks) rose. The average duration rose from 20.2 weeks to 20.8 weeks, while the share of long-term unemployed rose from 18.5 percent to 19.5 percent. This is consistent with the modest rise in recent weeks in the number of people receiving unemployment benefits.

    Strong Jobs Report With Inflationary Pressures Waning

    On the whole, this is a very positive report. The job growth is somewhat higher than can be sustained over the long term, but not hugely so. Most importantly from an inflation perspective, wage growth is now very close to being at a noninflationary pace. Other items in this report, such as the drop in the share of unemployment due to voluntary quits and the stabilization of average weekly hours at pre-pandemic levels, are also consistent with a strong, but normal labor market.

    We should never make too much of a single month’s data, but as the rate of wage growth falls back near a noninflationary pace, there is a reasonable case for the Fed pausing rate hikes to get a better picture of their impact to date.

    This post was originally published on Latest – Truthout.

  • Federal Reserve Chair Jerome Powell fielded questions for around 40 minutes on Wednesday following the central bank’s decision to impose another large interest rate hike, but not a single reporter asked about the extent to which record-high corporate profits are fueling inflation even as companies openly boast about their pricing power.

    Progressive economists have estimated that corporate profits are to blame for at least 40% of price increases during the recovery from the pandemic-induced downturn, a disproportionate contribution to the stubbornly high inflation that is eating away at workers’ wages. Some have put the number at over 50%.

    The notion that corporate price hikes are putting upward pressure on inflation — which has myriad causes — is hardly fringe. Lael Brainard, the Fed’s vice chair, acknowledged in a speech last month that “since the pandemic, significant supply and demand imbalances have coincided with large increases in retail trade margins in several sectors.”

    “In some sectors, the increase in the retail trade margin exceeds the contemporaneous increase in wages paid to the workers engaged in retail trade, although this is not true in food and apparel,” Brainard said. “The return of retail margins to more normal levels could meaningfully help reduce inflationary pressures in some consumer goods, considering that gross retail margins are about 30 percent of total sales dollars overall.”

    But corporations’ conscious decisions to raise consumer prices well beyond the actual costs of their goods and services didn’t receive any attention during Powell’s press conference.

    Instead, the Fed chair and reporters from corporate outlets such as The Wall Street Journal, Fox Business, The Washington Post, and The New York Times focused on workers’ wages and the labor market, which Powell is explicitly trying to weaken. Reporters also pushed Powell on the risks of recession, which he admitted are growing, and the stock market’s reaction to the Fed’s latest announcement.

    “Despite the slowdown in growth, the labor market remains extremely tight, with the unemployment rate at a 50-year low, job vacancies still very high, and wage growth elevated,” the Fed chair said during his opening statement. “Although job vacancies have moved below their highs and the pace of job gains has slowed from earlier in the year, the labor market continues to be out of balance, with demand substantially exceeding the supply of available workers.”

    While Powell — who has previously said one of his objectives is to “get wages down” — conceded Wednesday that he doesn’t see recent wage growth as the “principal story of why prices are going up,” he and other Fed officials continue to enact aggressive rate hikes that will ultimately have the effect of cutting wages and potentially throwing millions out of work.

    During his remarks Wednesday, Powell made clear that the Fed intends to raise interest rates further in the coming months and keep them elevated for the foreseeable future. Any talk of pausing the rate hikes to assess their impact on the economy, Powell said, would be “very premature.”

    The Fed’s sixth interest rate increase of the year — the fastest pace of hikes since the Volcker era — heightened already widespread concerns that the central bank is pushing the U.S. and potentially the global economy into a terrible downturn.

    “The Federal Reserve’s decision today to raise interest rates by 0.75% will have a direct and harmful impact on working people and our families,” said Liz Shuler, the president of the AFL-CIO. “The Fed’s actions will not address the underlying causes of inflation — the war in Ukraine, climate change’s effect on harvests, and corporate profits.”

    “Working people should not be the target of lowering inflation — it should be corporations that are earning record profits,” Shuler added.

    In recent weeks, despite the lack of attention to corporate profits during Powell’s Wednesday press conference and his previous appearances, mainstream media outlets and newspapers have increasingly highlighted the link between company price hikes and inflation that progressive publications and lawmakers have been emphasizing for months.

    Earlier this week, The New York Times ran a story noting that major food companies and restaurants “have continued to raise prices on consumers even after their own inflation-related costs have been covered.”

    “Although food companies are prominent examples of how rapid inflation is being passed from producers to consumers, the trend is evident across a wide variety of industries,” the Times observed. “Executives from banks, airlines, hotels, consumer goods companies, and other firms have said they are finding that customers have money to spend and can tolerate higher prices.”

    Previously, when it wasn’t being ignored or waved away, the connection between high corporate profits and inflation was mocked as a fantasy. In the op-ed pages of the Jeff Bezos-owned Washington Post, columnist Catherine Rampell called the idea that corporate greed is pushing up prices a “conspiracy theory.”

    But as the Economic Policy Institute’s Josh Bivens argued in response to Rampell’s May column, “Ignoring the role of profits makes inflation analyses a lot weaker.”

    “As a simple matter of fact,” Bivens wrote, “the rise in profits has been historic and has explained far, far more of the rise in prices over the past year than labor costs or import tariffs, and this makes it odd indeed to label calls to address this as ‘conspiracy theories.’”

    This post was originally published on Latest – Truthout.

  • Climate conditions are putting upward pressure on global food prices, as people around the world chafe under levels of inflation not seen in decades. A prolonged drought this autumn is parching the Mississippi River watershed, pushing up the cost of producing key crops in the U.S. agricultural heartland.

    The lack of rain is not only hindering farm output, it’s also causing the Mississippi to slow to a trickle along parts of the massive waterway, which is burdening global supply chains by significantly slowing barge traffic critical to the global food system, a U.S. government report warned last week.

    “River levels are typically lower in the fall, but this year they are even lower than normal, which is causing significant issues as [the] fall harvest is well underway,” noted the study from the National Integrated Drought Information System (NIDIS).

    In recent years, the Mississippi River basin has been responsible for producing 92 percent of U.S. agricultural exports, including 60 percent of annual U.S. grain exports, which are shipped down the river through the Port of New Orleans. The river also typically ferries 78 percent of exports in livestock feed to global markets.

    But the volume of goods currently being transported on the Mississippi is down 45 percent, the NIDIS report said. Barges face stricter limits on the amount of goods they can haul when water levels are low because they run a greater risk of running aground in shallow water when carrying more than a certain amount of weight.

    As a result of increased farming and shipping costs, people around the world are being priced out of food they desperately need. Since the start of last year, countries in the Americas, Europe, Africa and Asia have been suffering from a cost-of-living crisis triggered by global supply chain problems that developed during the COVID-19 pandemic. In the U.S., for example, the rate of inflation was above 8 percent in May for the first time since 1981.

    The crisis was exacerbated earlier this year by Russia’s invasion of Ukraine and the geopolitical fallout from the incursion. Grain markets were hit particularly hard, with both Russia and Ukraine serving as major wheat exporters in peacetime. U.S. farm goods were, therefore, in relatively high demand around the world before the Midwest and Great Plains were stricken by drought.

    Certain data suggest that poor people living in countries governed by right-wing politicians will suffer most as a result, with global increases in the cost-of-living appearing to be driven by laissez-faire economic policies. Bolivia, for example, has been able to keep inflation low thanks to its socialist government’s management of the economy. State-run energy and retail operations keep consumer prices stable in the South American country by releasing supply reserves to the market when excess demand persists. Meanwhile, in countries run by governments that have embraced the neoliberal approach to deregulation in recent decades — countries such as the U.S., the U.K. and Canada — price levels have grown in concert with corporate profits, which are at record levels.

    Profit incentivizes increased industry output only when markets are competitive, and monopoly power has been growing over the past two decades in higher-income countries. The corporations that dominate markets for food have been among the companies in the U.S. that have been able to pass on recent increases in costs to consumers while making a healthy profit for themselves, as a report published on November 1 by The New York Times detailed.

    Whatever the cause, the trend of higher price growth is being exacerbated by a warming planet, which is creating the conditions for extreme weather events like the ongoing drought causing vegetation dependent on the Mississippi River basin to wilt. To make matters worse, the full extent of the Midwestern drought damage is unknown. AccuWeather predicted that rainfall won’t return river traffic to normal until January, and that logistical disruptions have already added $20 billion to commercial transportation costs. Low levels of precipitation over the coming months could also threaten crops that haven’t even been planted yet, NIDIS warned.

    “If fall moisture is not replenished, the risk for drought continuing is increased for the next growing season, as improvements to soil moisture are limited over the winter, particularly to the north where soils are mostly frozen,” the agency said. Arid conditions have already hurt wheat, corn and soybean yields.

    While the Mississippi River basin goes through regular drought cycles, scientists say climate change causes such cycles to be more frequent and intense. Warmer conditions are also stoking historic drought conditions around the world, including in the western U.S., which has been facing a two-decade-old ongoing “megadrought” that intensified since the start of 2020. Europe, China and India are also being plagued by record low levels of rainfall, which is contributing to lower supplies and higher prices for staples like rice on world markets.

    “An index of grains and soybeans is trading almost 40% above the five-year average and the surge in crop prices has been a major contributor to global inflation,” Bloomberg warned in late August. “Already, food shortages helped lead to the downfall of Sri Lanka’s government earlier this year when the country ran out of hard currency needed to pay for imports.”

    Recently published studies have added to the mounting pile of evidence showing that global warming looks set to make food production a challenge in the future. A study published in Nature on October 29 found that vegetable crops can be “highly sensitive to environmental change” and that temperatures higher than 30 degrees Celsius, or 86 degrees Fahrenheit (30°C / 86°F), are “detrimental to crop yield.” Another report published on October 19 by the Environmental Defense Fund found that days with “killing-degree” heat, temperatures that begin around 84°F, are set to increase significantly throughout the U.S. agricultural heartland in the coming decades.

    In other words, people in the U.S. and around the world can expect more events that put upward pressure on food prices, like the ongoing Midwestern drought. The likelihood of their occurrence will only diminish if there’s a reduction in the carbon emissions causing climate change, and the harm done to people around the world will only be minimized if governments rein in corporate power.

    “With each fraction of a degree of warming, tens of millions more people worldwide would be exposed to life-threatening heat waves, food and water scarcity, and coastal flooding while millions more mammals, insects, birds and plants would disappear,” The New York Times noted in its report on the U.N warning. The world is currently getting a preview of what some of this will look like all along the Mississippi River.

    This post was originally published on Latest – Truthout.

  • A group of Democratic lawmakers led by Sen. Elizabeth Warren (D-Massachusetts) is pressuring the Federal Reserve to explain why it’s continuing to raise interest rates at such a rapid pace when economists across the political spectrum say that rate hikes will only hurt the working class with little upside for the economy at large.

    In a letter sent to Fed Chair Jerome Powell on Monday, 11 members of Congress lay out a wide swath of evidence from both Powell himself and from economists that American families will be in for “pain” in the coming months, as Powell has said, as the Fed plans to raise interest rates by 75 basis points, or 0.75 percent, for the third consecutive time this year.

    The letter, signed by progressive lawmakers like Sen. Bernie Sanders (I-Vermont) and Representatives Jamaal Bowman (D-New York) and Rashida Tlaib (D-Michigan), expresses “concern” about the Fed’s “alarming” plans and “disturbing warning” to American families about what to expect in coming months.

    As the lawmakers point out, the Fed has predicted that as it continues raising rates through next year, unemployment will rise from its current rate of about 3.5 percent to 4.4 percent in 2023 and 2024. This means that about 2 million people will lose their jobs as economic growth slows and the labor market grows weaker, Powell has said.

    “I wish there were a painless way to do that. There isn’t,” Powell said in a press conference in September, contrary to what progressive economists have said about the way that the Fed could wrangle inflation with minimal impact to the labor market.

    Other experts’ estimates of the impact on the economy are more dire. Bank of America estimates that unemployment could jump as high as 5.6 percent, which could mean the loss of over 3 million jobs. Meanwhile, according to a survey released last month by The Wall Street Journal, economists predict that there is a 63 percent chance that the U.S. will enter a recession in the next 12 months, in large part due to the Fed’s relentless rate hikes.

    Economists, who have been raising warnings about the damage that the rate hikes could cause for months, have been puzzled about Powell’s decisions, the letter points out. The United Nations Conference on Trade and Development has said that whether or not there will be a global recession comes down to “policy choices and political will,” economists are unclear on what the Fed’s goals are.

    “The Fed clearly wants the labor market to weaken quite sharply. What’s not clear to us is why,” one economist wrote in a report earlier this year, as the letter writers pointed out. Economists have also questioned whether or not the rate hikes could have as much impact on inflation as they’re supposedly meant to have, saying that the impacts on the working class could outweigh any supposed benefits.

    Even the Fed itself admits that the rate hikes may have little impact on inflation, considering the vast amount of other factors at play, like corporate price gouging and Russia’s invasion of Ukraine, the letter reads. The lawmakers list a variety of times that Powell has admitted that the Fed’s power over commodity prices is limited.

    “As one economist noted, the Fed can’t ‘click its heels three times, raise rates and have inflation drop. There’s a myriad of factors going on now, and it’s a mistake to think the Fed controls any more than a handful of those,’” the letter says. “Nevertheless, you continue to double down on your commitment to ‘act aggressively’ with interest rate hikes and ‘keep at it until it’s done,’ even if ‘[n]o one knows whether this process will lead to a recession or if so, how significant that recession would be.’”

    “These statements reflect an apparent disregard for the livelihoods of millions of working Americans,” the lawmakers wrote, “and we are deeply concerned that your interest rate hikes risk slowing the economy to a crawl while failing to slow rising prices that continue to harm families.”

    While progressives warn that the Fed’s rate hikes would be at best a band aid on the problem, they say that raising interest rates to suppress demand is a neoliberal policy that passes economic pain onto the consumer at any cost — even a recession. Progressive advocates say, instead, that providing relief to the public while targeting corporations who are using inflation to raise prices would be a good start.

    President Joe Biden appears to agree that corporate price gouging is an important underlying cause for inflation, at least in part. On Monday, he warned oil and gas companies that, if they don’t take action to lower gas prices at the pump, they could face a corporate windfall tax that would capture excess profits. Indeed, the oil and gas industry — and corporations as a whole — have been enjoying huge profits as inflation has soared, while Americans are increasingly having to take out predatory loans for basic expenses.

    This post was originally published on Latest – Truthout.

  • President Joe Biden called for a windfall tax on energy companies in a speech on Monday, a move that would deliver a major win to the climate and progressive advocates who have been calling for a tax on excess profits made amid high inflationary rates.

    In his response to major oil companies posting record-breaking profits, Biden cited wartime policies to stop corporations from war profiteering and said that oil companies must take steps to lower gas prices or face a tax on their profits.

    “If they passed the rest [of the profits] onto the consumers, the price of gas would come down around an additional 50 cents,” Biden said. “But rather than increasing their investments in America, or giving American consumers a break, their excess profits are going back to their shareholders and are buying back their stocks and their executive pays are going to skyrocket. Give me a break.”

    Oil companies must “invest in America by increasing their production and refining capacity” and lower prices, he said. “If they don’t, they’re going to pay a higher tax on their excess profits and face other restrictions.” He said he will work with Congress to explore the government’s options for this action.

    Oil majors reported huge profits last week as they released their Q3 finances for this year. Exxon, Chevron and Shell made record or near-record profits totalling billions of dollars each; Exxon, in fact, made the largest quarterly profit ever reported by an international oil company, at a profit of $19.7 billion. Experts have said that the high profits that the fossil fuel industry has experienced — and the stock buyback programs and shareholder enrichment that they allow — are evidence that the companies are price gouging customers at the pump.

    Meanwhile, gas prices have stagnated after steadily falling from peak levels for a few months, and remain high at about $3.76 per gallon on average across the country.

    The news was celebrated by Democrats, progressives and climate advocates who have been calling for a corporate windfall tax for months. They say that a windfall tax could be a crucial way for Democrats to tackle the current economic pressures facing Americans and that the move could represent a rebuke to corporations as they grow bolder in squeezing the public for profit.

    “President Biden is right. At a time when Exxon, Shell and Chevron increased their profits by 168 percent to $81 billion in the last 2 quarters by charging outrageously high prices at the pump, we need a windfall profits tax,” said Sen. Bernie Sanders (I-Vermont) on Twitter. “The revenue should go directly back to the American people.”

    In March, Sanders introduced a bill that would capture 95 percent of profits made by any large corporation in excess of pre-pandemic levels, in hopes of curbing greed-fueled inflation. And, earlier this year, Rep. Ro Khanna (D-California) and Sen. Sheldon Whitehouse (D-Rhode Island) introduced a narrower tax that would capture 50 percent of the price increase of oil barrels compared to pre-pandemic levels. The profits from the tax would be sent directly back to consumers.

    Those bills were never brought to a vote, and conservative Sen. Joe Manchin (D-West Virginia) has expressed his opposition to the idea, which, partnered with Republicans’ almost certain uniform opposition, would likely doom any chance of passing legislation that comes before Congress. But Biden’s support of the idea could bring renewed energy to the proposal, bringing it from the sidelines to the mainstream in Congress.

    “This is exactly the type of leadership we’ve been waiting for from President Biden. Big Oil has made nearly $300 billion in excess profits this year by gouging us at the pump,” said Stop the Oil Profiteering spokesperson and climate activist Jamie Henn in a statement. “With 80 percent of voters supporting the policy, this could be a political game changer for Democrats. It’s a clear way for them to play offense against opponents who are in the pockets of Big Oil.”

    Advocacy groups have rallied around the policy. Earlier this year, over 120 progressive and climate groups sent a letter to Senate Majority Leader Chuck Schumer (D-New York) and House Speaker Nancy Pelosi (D-California) urging them to support the idea, saying that the oil and gas industry has been exploiting crises like the Russian invasion of Ukraine to rake in profits and further cement its dominance over the global energy system.

    The implementation of a windfall tax would not be without precedent. As Sanders pointed out when he introduced his bill, the U.S. has enacted similar windfall taxes during the first and second World Wars and during the Korean War in order to combat war profiteering.

    Further, U.K. lawmakers levied a windfall tax on oil and gas producers earlier this year — the implementation of which could provide lessons for Biden. Climate advocates have criticized the U.K. law for being too lax and for allowing the government to continue subsidizing oil and gas companies while taxing them; Shell, for instance, has paid none of the 25 percent tax on profits so far despite making a record-breaking $30 billion in profits so far this year because the company made investments in production.

    This post was originally published on Latest – Truthout.

  • On Friday, Exxon posted the highest quarterly profits ever posted by any U.S. oil company.

    Exxon’s profit last quarter of $17.9 billion was the highest posted by any major international oil company in history. This quarter’s profits smashed that record, totalling $19.7 billion in the third quarter of this year, nearly triple what the company made over the same time period last year.

    Other oil giants also posted record profits this quarter. Chevron posted its highest ever profits of $11.2 billion, nearly doubling profits from the same time last year. TotalEnergies doubled its profits, posting a net income of $9.9 billion, a record profit for the company.

    Shell’s net income also multiplied from last year, reaching $9.45 billion, the corporation’s second-highest quarterly profits — afforded to them at least in part because of the company’s successful avoidance of paying a windfall tax that the U.K. has levied on them. The company also announced that it will be carrying out a $4 billion stock buyback plan because of the profits.

    These profits come as gas prices have skyrocketed over the past two years. Gas prices reached a high this summer and have since cooled down slightly but remain high at a national average of $3.76 per gallon as of Friday, according to AAA.

    Progressives and climate advocates have said that high gas prices are a direct result of price gouging by oil and gas companies — and that high inflation rates in general have been caused by corporate greed. Indeed, oil and gas companies have been experiencing a windfall that’s corresponded with all-time record profits for corporations this year.

    Experts agree that current gas prices are greed-driven. While workers across the U.S. are struggling to even drive to work because of gas prices, oil and gas CEOs have been enjoying high gas prices, which give them the funds to shower their executives and shareholders with cash. As gas prices soared this summer, for instance, Exxon laid out plans for a $30 billion stock buyback program to enrich their shareholders.

    “This is what price-gouging looks like,” the Institute for Policy Studies wrote on Twitter in reaction to news of Shell’s profits on Thursday. “Oil and gas companies won’t choose to stop exploiting people on their own — we need government action.”

    Lawmakers have proposed levying a windfall tax on oil companies’ profits as they exploit global inflation and Russia’s invasion of Ukraine. Sen. Bernie Sanders (I-Vermont) went one step further in March, proposing that the U.S. levy a tax on all major corporations’ excess profits until 2024 in order to discourage them from price gouging. But these bills ultimately fizzled out, with conservatives like Sen. Joe Manchin (D-West Virginia) against the idea.

    These record profits are alarming from a climate standpoint. More profits for oil companies only further entrench their position and power at a time when climate experts are warning that the world must draw down its use of fossil fuels immediately or risk pushing the planet ever further into climate catastrophe.

    This post was originally published on Latest – Truthout.