Modern Monetary Theory

[Elvis]

A documentary on MMT will be released in May, it looks good, early screenings have met great success. Here's the trailer:


Finding the Money OFFICIAL TRAILER


https://www.youtube.com/watch?v=R47h_ux-nE8

[Elvis]

Why neoclassical economics has failed


https://www.youtube.com/watch?v=eNJSeWlw8a8

[Elvis]

Economist Isabella Weber explains in a long-form interview where the inflation surge came from and how the Biden administration struggled to take necessary measures to combat it.

https://jacobin.com/2024/11/inflation-b ... e-controls

Isabella Weber

I have called this inflation “sellers’ inflation,” because the pricing decisions of firms are key to understanding how price spikes in specific sectors were translated into general inflation. We have seen price spikes in systemically important upstream sectors like, for example, the energy sector, the shipping sector, and the raw materials sector.

The energy sector and the raw materials sector are basically commodity markets. In these markets, we have extremely volatile prices, prices that go up and down with supply and demand. For the rest of the economy, we have, for the most part, sectors that are dominated by large corporations that actively set prices. But even these large, powerful corporations do not increase prices if they cannot be sure that their competitors will do the same. Collusion and conspiracies are of course ways of coordinating price hikes. But our new research on corporate earnings calls shows that cost shocks can also coordinate price hikes in a more implicit way.

These price spikes at the beginning of the value chain in, most importantly, energy but also some other areas presented themselves as a cost shock to the rest of the corporate sector. If you know that your costs as well as your competitors’ costs are shooting up, then, as corporate price setters, you do not have to talk to one another to know that this is a moment to raise prices.

How are firms going to hike prices? They’re going to hike prices enough to at least protect their markups. If a firm protects its markup in response to a cost shock, this means an increase in profits. It’s like buying a cheap house and giving the real estate agent a 3 percent fee versus buying an expensive house and paying the same 3 percent fee. In one case, the broker gets a little; in the other case, he gets a lot. The same mechanism means that merely protecting markups provides an increase in profitability for corporations.

That’s an important point, because we have had this epic debate before, over whether failing to raise markups means there hasn’t been sellers inflation. No: sellers’ inflation says there are profit explosions at the beginning of the value chain, particularly in energy, grain trading, commodity trading, shipping, and other systemically significant sectors, and then across the economy — profits go up as markups are being protected. The flip side is that if the corporate sector as a whole manages to protect markups and increase profits, it’s pushing the costs of these shocks onto consumers, onto the working class, so that this inflation creates a redistribution from the bottom to the top.
"If the corporate sector as a whole manages to protect markups and increase profits, it’s pushing the costs of these shocks onto consumers, onto the working class."

Eventually workers will fight back, which is what we have seen. Eventually you get strikes; you get people asking for more money. But first, real wages decline and purchasing power declines. In fact, even though we have seen a catch-up on the wage side, the labor share in the economy is still down compared to where it was before inflation.

More at link.

[Elvis]

Herodotus knew 2400 years ago that money created retail markets—not the other way around.

Herodotus coins markets.jpg