Date: 2023-06-26 07:42 am (UTC)
reverancepavane: (Default)
From: [personal profile] reverancepavane
The problem with raising interest rates to combat inflation is that it is based on 1970's US economic philosophy, where rising labour prices were assumed to be driving inflation. However as Yanis Varoufakis points out in his latest book labour is almost completely decoupled from wealth generation in the West, since it was mostly moved off-shore to place with cheap or controllable labour, and most wealth in the West is being generated by rents (fees paid on capital). Which means that raising the interest rate has a negligible effect on the inflation rate. Which is almost always greedinflation - paying higher rents, usually in the form of stock dividends. The old 1950s balance between labour and manufacturing is long gone.

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