Re:The U.S. government’s failed 1890s attempt to forge unity...
by dnautics on Friday June 11, 2021 @02:54PM
(#27477152)
> Krugman is not saying that inflation enables long-term, general real wage cuts to be more easily implemented or that it would be good for it to do so.
You're right, that's not what he's saying. That doesn't mean it's not happening.
Fact of the matter is that we can't decouple the "shifting of the tax burden" from the detachment of the dollar. However, we will soon find out. Biden is shifting the tax burden back, and we're gonna get inflation. My prediction is that in 10 years the lower and middle classes are going to be absolutely reamed by both of these and the upper class will be unscathed or even richer (lower class due to inflation directly and middle class due to bracket creep + taxes intended for the wealthy). Your prediction should be that income inequality will be ameliorated. We'll see who is correct.
They did until a series of fiscal policy (tax and spending) changes in the 1970s and 1980s (including the massive Reagan tax burden shift onto workers) put the kibosh on it. Since then, not so much, but that’s not a monetary policy issue, insofar as those two things have been artificially segmented.
> Inflation is a stealth wage cut, a matter of policy for cheating the labor class.
You are misunderstanding the Krugman quote. The value he is citing is that as there are demand shifts in the economy, inflation allows small short-term real wage cuts in segments of the economy seeing decreased demand and therefore profitability without reducing nominal wages (whumich tend to be sticky), reducing resort to job cuts as a response, providing a buffer between short-term fluctuations and unemployment.
Krugman is not saying that inflation enables long-term, general real wage cuts to be more easily implemented or that it would be good for it to do so.
> Finally, inflation forces the middle class to invest instead of save
The middle and upper class are, by definition the clases with substantial dependence on the returns from productive capital. Inflation doesn't force the moddle class to invest in capital, substantial investment in capital while still having a dependency on your labor is what defines being middle class. You can choose not to invest in capital, whether by stuffing money in a mattress or blowing it on hookers and blackjack, but if you do that you aren’t middle class.
> Thus it is a siphon that steals wealth from the poor and middle class and gives it to the wealthy.
No, the siphon that does that is the series of tax burden shifts adopted over the last several decades with the express design of rewarding/encouraging the wealthy (often euphemized as “job creators”).